Johnson Company has retained earnings balance of $550,000 at the end of 2014. During 2014 Johnson issued $200,000 of 10 year, 10% bonds. As part of the bond issue the each year $20,000 of retained earnings will be unavailable to pay dividends.
Required:
Show the proper reportinng requirements for Johnson’s retained earnings restriction.

Question

Johnson Company has retained earnings balance of $550,000 at the end of 2014. During 2014 Johnson issued $200,000 of 10 year, 10% bonds. As part of the bond issue the each year $20,000 of retained earnings will be unavailable to pay dividends. 
Required:
Show the proper reportinng requirements for Johnson’s retained earnings restriction.

Quizplus · Accepted Answer

The Answer of Johnson Company has retained earnings balance of $550,000 at the end of 2014. During 2014 Johnson issued $200,000 of 10 year, 10% bonds. As part of the bond issue the each year $20,000 of retained earnings will be unavailable to pay dividends. 
Required:
Show the proper reportinng requirements for Johnson’s retained earnings restriction.

Johnson Company Has Retained Earnings Balance of $550,000 at the End