Larry Limited has 4,000,000 ordinary shares of 50k each and 150,000 5% prefrence shares of
FINANCIAL
JAMB 2023
Larry Limited has 4,000,000 ordinary shares of 50k each and 150,000 5% prefrence shares of N1 each fully paid.
N | |
Net profit for the year | 90,000 |
Interim dividends paid: | |
Ordinary shares | 25,000 |
Profit and loss appropriation b/f | 10,000 |
Goodwill written off | 1,000 |
The amount of preference shares dividends payable at the end of the year is
- A. N10,000
- B. N25,000
- C. N7,500
- D. N20,000
Correct Answer: C. N7,500
Explanation
Preference shares dividends are calculated based on the nominal value of the preference shares and the fixed dividend rate. In this case, Larry Limited has 150,000 preference shares of N1 each, and the dividend rate is 5%. Therefore, the preference shares dividends payable at the end of the year is 150,000 * 1 * 5% = N7,500.
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