The entry to record an appropriation of retained earnings requires a debit to Retained earnings and a credit to Cash.

Question

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An appropriation of retained earnings involves allocating a portion of the company's profits to a specific use, such as paying dividends or investing in a capital project. This does not involve a cash transaction, so no credit to Cash would be required. Instead, the credit would be made to a specific account related to the use of the appropriated earnings, such as dividends payable or a capital project account. Therefore, the entry to record an appropriation of retained earnings would involve a debit to Retained earnings and a credit to the specific account being used for the appropriation.

The Entry to Record an Appropriation of Retained Earnings Requires