
A company has the following capital structure:
Authorised Issued
25p 4% Preference shares £400,000 £100,000
£2 Ordinary shares £500,000 £200,000
If the company declares a dividend of 10p per ordinary share, the total dividend payable by the company will be?
Select ONE answer:
- £14,000
- £26,000
- £54,000
- £66,000
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 1
- Correct – Preference dividend = £100,000 * 4% = £4,000 + Ordinary dividend = 100,000 shares * 10p each = £10,000. Therefore, (100,000 shares = £200,000 / £2 nominal (par) value) = £14,000
- Not correct
- Not correct
- Not correct
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