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WAEC Financial Accounting 2006 Question 12

Question 12

Company Accounts

Ordinary shares of N1 each N500,000
8% preference shares of N1 each N200,000
Interim dividends paid: ordinary shares N40,000; preference shares N12,000
Profit for the year N100,000
If no profit is to be retained, proposed ordinary shares dividend is

  1. A.N48,000
  2. B.N44,000
  3. C.N40,000
  4. D.N28,000
Show the answer and explanation

Answer: B (N44,000)

Explanation

100,000 − preference 16,000 − ordinary interim 40,000 = N44,000 left for the proposed ordinary dividend.