On dissolution, the balance of 'Profit & Loss Account' appearing on the assets side of a Balance Sheet is transferred to:
Answer & explanation
Correct answer: option 3
For transfer of debit balance of profit and loss account that was appearing on the assets side of balance sheet, if any, to partners’ capital accounts in their profit sharing ratio:
Partners’ Capital A/c (individually) Dr.
To Profit and loss A/c.
If there is credit balance of profit & loss account then the journal entry is reversed.