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WAEC Financial Accounting 2003 Question 7

Question 7

Company Accounts

Net profit for the year N75,000
Ordinary share capital of 50 kobo each N65,000
10% Preference shares of 50 kobo each N100,000
The amount available as dividend to ordinary shareholders is

  1. A.N75,000
  2. B.N65,000
  3. C.N55,000
  4. D.N52,500
Show the answer and explanation

Answer: B (N65,000)

Explanation

Preference dividend 10% × 100,000 = 10,000; 75,000 − 10,000 = N65,000.