Read the following information carefully and answer the next five questions.

G, K and B were partners running a partnership for last 10 years, sharing profit and loss in the ratio of 5:3:2. Post Covid, their firm was affected badly and started incurring losses. On 31st March,2023 they all decided to dissolve the firm due to continuous losses. Their capital balances were ₹4,00,000, ₹3,00,000 and ₹2,00,000 respectively. Firm had liabilities ₹80,000, cash balance ₹40,000, other sundry assets ₹8,50,000 and P&L A/c constituted the rest. Assets realised at 80% and liabilities were paid in full. There was unrecorded liability of ₹50,000 which was settled at ₹40,000. Realisation expenses amounted to ₹30,000 being paid by G on behalf of the firm.

Existing profit an loss Account in the books of the firm will be shared/borne by partners in the ratio:

5:3:2

The correct answer is option 1- 5:3:2.

Profit and loss debit balance is an accumulated loss which should be transferred to partners in their old profit sharing ratio. The old ratio is 5:3:2 so the correct answer is option 1.