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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Restrictions Pemberton Company has a retained earnings balance of $400,000 at the end of 2019. During 2019, it had issued $100,000 of 5-year, 12%, long-term bonds. The bond provisions require that each year over the 5-year period an additional $20,000 of retained earnings be unavailable for dividends. This restriction is in addition to any other retained earnings restrictions that the company might make. At the end of 2019, Pemberton held treasury stock costing $15,000.

Required:

Show how Pemberton would report its retained earnings in its 2019 financial statements. Include a note to the financial statements fully describing the restrictions.

To determine

State the manner by which the Company P will report it’s retained in its 2019 financial statement.

Explanation

Retained earnings:

Retained earnings are that portion of profits which are earned by a company but not distributed to stockholders in the form of dividends. These earnings are retained for various purposes like expansion activities, or funding any future plans.

State the manner by which the Company P will report it’s retained in its 2019 financial statement.

Shareholder’s equity Amount in $
Retained ea...

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