Chadwick Associates retained $850,000 of net income in the business in Year 1. If $75,000 was appropriated to satisfy the restrictive covenant of a loan agreement, what are the financial statements effects of the appropriation?

Question

Quizplus · Accepted Answer

Appropriating retained earnings has no impact on the financial statements, aside from shifting the $75,000 from retained earnings to appropriated retained earnings.

Chadwick Associates Retained $850,000 of Net Income in the Business