Response to the following problem:
The partial shareholders' equity section of the Enermax Machine Company Limited balance sheet at December 31, 2016 appears below.
Retained earnings
Restricted for plant expansion $200
Unrestricted 900
Total retained earnings $1,100
Required:
1. Why do you think the directors established a restriction for plant expansion on retained earnings?
2. Assume that the plant expansion was completed by June 30, 2017. What entry would be made to eliminate the restriction?