Question

if credit balance of profit and loss account in dissolution then what will be journal entry for this.

Answer 1

On transfer of undistributed profits/losses and reserves: Date. Particulars. Amount (Dr.) Amount (Cr.) Profit and Loss A/c. Dr. ...

Transfer of Realisation profit/ loss. Date. Particulars. Amount (Dr.) Amount (Cr.) Realisation A/c. To Partners' Capital A/c. ...

For final settlement with partners:

Explanation:

This account is prepared to know the profit made or loss incurred at the time of dissolution of a firm. All the assets except cash and bank a/c are transferred to the debit side of realization account and liabilities (not capital accounts) are transferred to the credit side of realization account.