A & B were partners in a partnership firm. Due to the ill health of B they decided to dissolve the firm. The position of assets and liabilities on the date of dissolution was:

It was agreed that following transactions will take place:

a) A wanted to start the business in sole proprietorship so he took building and furniture at 10% less than book value.
b) All the debtors proved good except a person C who did not pay ₹10,000

The accumulated profits and reserves are transferred to:

Partner's Capital A/c

The correct answer is option 3- Partner's Capital A/c.

For transfer of accumulated profits in the form of general reserve or any other form to partners’ capital accounts in their profit sharing ratio at the time of dissolution of firm:
General Reserve A/c Dr.
   To Partners’ Capital A/c (individually)
(Transfer of general reserve)