On July 1,Year 1,Village Bookstore,Inc.appropriated retained earnings in the amount of $36,000 for a future remodeling project in the basement of the bookstore.On June 30,Year 1,the balance of Retained Earnings was $82,800 and the Cash balance was $43,200.Which of the following answers shows the effect of the July 1 event on the elements of the financial statements?

Question

Quizplus · Accepted Answer

The appropriation shifts $36,000 from retained earnings to appropriated retained earnings. In other words, retained earnings decreases by $36,000 and appropriated retained earnings increases by $36,000.