XYZ reported the following on its December 31,2014,balance sheet: common shares,no-par,$200,000; unappropriated retained earnings,$40,000; appropriation of retained earnings for bond sinking fund,$10,000; and reserve for possible future inventory losses,$5,000.Therefore,the last line on the retained earnings statement,total appropriated and unappropriated retained earnings should be:

Question

Quizplus · Accepted Answer

The total appropriated and unappropriated retained earnings is the sum of unappropriated retained earnings ($40,000) and the appropriation for the bond sinking fund ($10,000), which equals $50,000. However, the reserve for possible future inventory losses ($5,000) is also considered an appropriation, bringing the total to $55,000.

XYZ Reported the Following on Its December 31,2014,balance Sheet: Common