The agreement under which Karset Transport Ltd. issued its long-term debt requires the restriction of $150,000 of

Question:

The agreement under which Karset Transport Ltd. issued its 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 Karset Transport Ltd.'s at December 31, 2017, assuming:
a. Karset Transport Ltd. discloses the restriction in a note. Write the note.
b. Karset Transport Ltd. appropriates retained earnings in the amount of the restriction and includes no note in its statements.
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...