(Solution) - Pemberton Company has a retained earnings balance of 400 000 at -(2025 Original AI-Free Solution)

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Pemberton Company has a retained earnings balance of $400,000 at the end of 2013. During 2013, 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 2013, Pemberton held treasury stock costing $15,000.
Required:
Show how Pemberton would report its retained earnings in its 2013 financial statements. Include a note to the financial statements fully describing the restrictions.