At the time of retirement of a partner, undistributed profits appearing in the balance sheet of the old firm is transferred to the capital account of:
- ANewly admitted partner only
- BOld partners in old profit sharing ratio
- CAll the partners, except new in the new profit sharing ratio
- DOld partners in the sacrificing ratio
Solution & Step-by-step Explanation
Undistributed profits accumulated prior to retirement are the results of past efforts of all existing old partners. Therefore, they are allocated and transferred into the capital accounts of all old partners in their old profit-sharing ratio.