Question: How are restrictions of retained earnings reported ?

Answer
A debit is recorded for a restriction on retained profits. A deficit is defined as a debit
balance in the Retained Earnings account.
Step-by-Step Solution
Step 1: Meaning of Retained Earnings
The amount of a company's income that isn't distributed as dividends to shareholders
and is instead held aside for reinvestment is known as retained earnings (RE).
At the end of each accounting period, retained earnings are reported on the balance
sheet under the shareholder's equity section. To calculate RE, first, add the beginning
RE balance to the net income (or deduct it from a net loss), then subtract dividend
payouts.
Step 2: Reporting of Retained Earnings
Retained earnings restrictions are best mentioned in a footnote to the financial
statements. This provides for a more thorough explanation of the constraint.