Supplemental Problem 15-3

Appropriation of Retained Earnings

Dayton Company has decided to build a new warehouse at a cost of $2 million. It will appropriate $1 million in each of the next two years, then build the warehouse at the beginning of the third year.

Required:

Assuming Dayton makes journal entries to account for appropriations, record the following:

1.The appropriation of Retained Earnings in year 1.

2.The appropriation of Retained Earnings in year 2.

3.The completion of the warehouse in year 3 at an actual cost of $2,300,000. Dayton paid cash.

4. The release of the appropriation in year 3.