Use the Following Information to Answer Questions
on 1 $\begin{array} { l l } \text { Share Capital } & \$ 35,000 \\\text { Retained Earnings } & \$ 15,000\end{array}$

question 10

Multiple Choice

Use the following information to answer questions
On 1 July 2008, P Limited acquired all the issued shares of S Limited for $50 000 when the equity of S Limited consisted of:
$\begin{array} { l l } \text { Share Capital } & \$ 35,000 \\\text { Retained Earnings } & \$ 15,000\end{array}$
During the year ended 30 June 2009, S Limited paid an interim dividend of $5 000 from profits earned before 1 July 2008.
-The pre-acquisition elimination entry at 30 June 2009 is:

• A)\(\begin{array} { c l l l }
• \text { Opening Retained earnings } & \mathrm { Dr } & 10,000 & \\
• \text { Share capital } & \mathrm { Dr } & 35,000 & \\
• \text { Shares in S Limited } & \mathrm { Cr } & 45,000
• \end{array}\)
• B)\(\begin{array} { l l l l }
• \text { Opening Retained earnings } & \mathrm { Dr } & 15,000 & \\
• \text { Share capital } & \mathrm { Dr } & 35,000 & \\
• \text { Shares in S Limited } & \mathrm { Cr } & 50,000
• \end{array}\)
• C)\(\begin{array} { l l r l }
• \text { Opening Retained earnings } & \mathrm { Dr } & 10,000 & \\
• \text { Share capital } & \mathrm { Dr } & 35,000 & \\
• \text { Dividends payable } & \mathrm { Dr } & 5,000 & \\
• \quad \text { Shares in S Limited } & \mathrm { Cr } & 50,000
• \end{array}\)
• D)\(\begin{array} { l l l l }
• \text { Opening Retained earnings } & \mathrm { Dr } & 15,000 & \\
• \text { Share capital } & \mathrm { Dr } & 35,000 & \\
• \text { Shares in S Limited } & \mathrm { Cr } & & 45,000 \\
• \text { Dividends paid } & \mathrm { Cr } & & 5,000
• \end{array}\)

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Definitions:

Business Consolidation

The process of combining two or more companies into a single entity, often to increase efficiency and reduce competition.

Trustbusting

Government activities aimed at breaking up monopolies and trusts (large business entities) to foster competition and prevent market domination, prominently associated with the early 20th century.

Upton Sinclair

An American writer and social activist known for his novel "The Jungle," which exposed labor and sanitary conditions in the U.S. meatpacking industry, contributing to the passage of federal food safety laws.

The Jungle

A novel by Upton Sinclair published in 1906, exposing the harsh conditions and exploited lives of immigrants in the United States meatpacking industry.