Question

At December 31, 20X1, Eagle Corp. reported $1,750,000 of appropriated retained earnings for the construction of a new office building, which was completed in 20X2 at a total cost of $1,500,000. In 20X2, Eagle appropriated $1,200,000 of retained earnings for the construction of a new plant. Also, $2,000,000 of cash was restricted for the retirement of bonds due in 20X3. In its 20X2 balance sheet, Eagle should report what amount of appropriated retained earnings?

Answer 1

Answer:

$ 1,200,000 is appropriated retained earning (for the construction of new plant)

Explanation:

The $2,000,000 of restricted does not affect the retained earnings because cash restricted for retirement of bonds (as an assets account fund called sinking fund) and the  $1,500,000 and $1,750,000 do not affect the retained earnings because when new building is completed $ 1,750,000 was restored to inappropriate retained earning.

hence Eagle should report $1.200,000 of appropriated retained earnings