Day: May 11, 2020

The authorised share capital of a company is comprised of £150,000 of 50p ordinary shares and 50,000 6% preference shares of £1 each.  Ordinary shares with a nominal (par) value of £100,000 and all of the preference shares have been issued and are fully paid.

If the company pays the preference dividend and proposes to pay an ordinary dividend of 10p per share, then the total dividends payable by the company will be?

Select ONE answer:

1. £13,000
2. £18,000
3. £23,000
4. £33,000

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Preference dividend is £50,000 * 6% = £3,000 + Ordinary dividend is 200,000 shares * 10p = £20,000 – Therefore, total is £23,000
4. Not correct

 

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