The Profit and Loss Appropriation A/c is debited when distributing profits among partners.
The Profit and Loss Account determines the net profit or loss for the year. This net profit is then transferred to the Profit and Loss Appropriation Account, which shows how the profits are appropriated (divided) among the partners according to their profit-sharing ratio.
The journal entry for distribution of profits is:
Profit and Loss Appropriation A/c Dr.
To Partner A's Capital A/c
To Partner B's Capital A/c
To Partner C's Capital A/c
The appropriation account is debited because it represents the application or distribution of profits, while the individual partner's capital accounts are credited to reflect their share of profit.
Partner's Capital A/c (Option 2) is credited, not debited, during profit distribution. Goodwill A/c (Option 3) and Profit and Loss A/c (Option 4) are not involved in the actual distribution of profits to partners.