Ji-hyuk Corp.’s agreement for the issuance of long-term debt requires the restriction of $150,000 of the company’s Retained Earnings balance. Total Retained Earnings is $337,500, and total contributed capital is $250,000.

Required

Show how to report shareholders’ equity (including retained earnings) on Ji-hyuk Corp.’s balance sheet at December 31, 2020, assuming:

1. The restriction is disclosed in a note. Write the note.

2. The company appropriates retained earnings in the amount of the restriction and includes no note in its statements.