Question

What was the purpose of the declaration issued by the allies at Potsdam

Answer 1

The Potsdam declaration was issued on the 26th of July 1945 by the Allies (United States, China and United Kingdom) towards Japan as an ultimatum to either surrender or suffer the consequances. 
It's called the Potsdam Declaration because Potsdam was the city (in Germany) where the Allied leaders gathered to discuss it. 

Answer 2

B. The allies warned Japan to surrender or suffer the consequences