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Several Years Ago, a Corporation Set Up a Reserve for Storm

Question 148

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Several years ago, a corporation set up a reserve for storm losses in the amount of $300,000 as an appropriation of retained earnings.During the current year, the company suffered a $85,000 hurricane loss that was not covered by insurance.The firm reduces appropriations when their purpose has been fulfilled.Give the entry(s)to record the loss and provide any appropriate explanation.

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