Larry Limited has 4,000,000 ordinary sha...
Larry Limited has 4,000,000 ordinary shares of 50k each and 150,000 5% prefrence shares of ₦1 each fully paid.
₦ |
|
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
₦10,000
₦25,000
₦7,500
₦20,000
Correct answer is C
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 ₦1 each, and the dividend rate is 5%. Therefore, the preference shares dividends payable at the end of the year is 150,000 * 1 * 5% = ₦7,500.
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