Reith Ltd Owns All of the 10 Million Issued Ordinary

question 10

Multiple Choice

Reith Ltd owns all of the 10 million issued ordinary shares of Beasley Ltd.Beasley Ltd declared and paid a dividend of $0.80 per share during the 20X1 financial year out of profits it earned during 1999.Reith Ltd acquired Beasley Ltd in 20X0.What is the journal entry recorded by Reith Ltd in its own accounts for the 20X1 financial year?

• A)\(\begin{array}{llcc}
• \text { Accounts } & \text { Debit \$000 } & \text {Credit\$000 } \\
• \text { Bank } &8000\\
• \text { Dividend Revenue } &&8000\\
• \end{array}\)
• B)\(\begin{array}{llcc}
• \text { Accounts } & \text { Debit \$000 } & \text {Credit\$000 } \\
• \text { Bank } &8000\\
• \text { Investment in Beasley Ltd} &&8000\\
• \end{array}\)
• C)\(\begin{array}{llcc}
• \text { Accounts } & \text { Debit \$000 } & \text {Credit\$000 } \\
• \text { Investment in Beasley Ltd } &8000\\
• \text {Bank } &&8000\\
• \end{array}\)
• D)\(\begin{array}{llcc}
• \text { Accounts } & \text { Debit \$000 } & \text {Credit\$000 } \\
• \text { Investment in Beasley Ltd } &8000\\
• \text { Retained Profits } &&8000\\
• \end{array}\)

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Definitions:

Unilateral Mistake

A situation where only one party to a contract is mistaken about a fundamental aspect of the contract, affecting the agreement's validity.

Original Party

The initial entities or individuals who entered into a contract or agreement.

Assignee

An assignee is a person or entity appointed to receive the rights or property under a contract or agreement from another, known as the assignor.

Assignor

The party in a contract who transfers their rights or interests in a property or agreement to another party, known as the assignee.