Larry Limited has 4,000,000 ordinary shares of 50k each and 150,000 5% prefrence shares of ₦1 each fully paid.
The amount of preference shares dividends payable at the end of the year is ____________
| ₦ | |
| 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 ____________
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Correct Answer: Option C
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 ₦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.
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.