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 23

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 2010 will be:

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

Use break-even analysis to make informed business decisions.

Analyze and solve problems related to the sales mix and its impact on company profitability.

Understand the concept of break-even analysis in units and dollars.

Calculate and interpret the effect of advertising and sales commissions on net operating income.

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