(Solution) - The agreement under which Karset Transport Ltd issued its long term -(2025 Original AI-Free Solution)

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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 balance sheet at December 31, 2014, 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.