Discuss the below:
RETAINED EARNINGS APPROPRIATION
Q: On October 2, 20-1, the board of directors of Carr Company appropriated $400,000 of retained earnings for the purpose of buying a new yacht (used for entertaining clients). On July 15, 20-2, the yacht was purchased and the board of directors decided that the appropriation was no longer needed.
Prepare journal entries for the appropriation on October 2, 20-1, and the subsequent return on July 15, 20-2.