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

question 148

Essay

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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Definitions:

Diathesis-Stress Model

A psychological theory that explains behavior as both a result of biological and genetic factors ("diathesis") and life experiences ("stress").

Developmental Trajectory

The course of development taken by an individual or group over time, often studied in psychological and educational contexts.

Emotional Sensitivity

An individual's heightened ability to perceive, feel, and respond to emotions in themselves or others.

Causal Link

A relationship where one event or action is understood to directly cause another.