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WAEC Financial Accounting 1992 Question 38

Question 38

Company Accounts

Oruwa Limited has authorised share capital of 300,000 ₦1 ordinary shares of which 250,000 shares were issued at ₦1.30. All the issued shares are fully paid. Dividend declared is 5%. How much is the dividend shown in the Appropriation Account?

  1. A.₦31,250
  2. B.₦27,500
  3. C.₦16,250
  4. D.₦15,000
  5. E.₦12,500.
Show the answer and explanation

Answer: E (₦12,500.)

Explanation

Dividend is on nominal value issued: 5% × 250,000 = ₦12,500.