At the time of admission of a new partner, the credit balance of the Profit and Loss account appearing in the books is typically transferred to:

(3) Old partner's capital account

This is done to allocate the undistributed profits among the existing partners in their capital accounts in the profit-sharing ratio. The Profit and Loss account is closed by transferring its balance to the partners' capital accounts to reflect the division of profits among the existing partners as they admit a new partner