At the time of death of a partner, undistributed Losses appearing in the balance sheet of the old firm is transferred to the capital account of:
- AOld partners in the gaining ratio
- BOld partners in old profit sharing ratio
- CDeceased partner only
- DContinuing partners in the new profit sharing ratio
Solution & Step-by-step Explanation
Accumulated profits, reserves, or accumulated losses existing on the date of death or retirement belong completely to all the old partners since they were earned/incurred during their collaborative runtime. Hence, undistributed losses are debited to all old partners (including the deceased partner) in their old profit sharing ratio.