Day: September 26, 2022

A newly formed company issues

• 1,000,000 ordinary shares of £1 at £2.50 each
• £300,000 5% debentures

Operating profit for the year was £465,000.

The directors recommend an 8% ordinary dividend for the year.

What is the retained profit for the year?

Select ONE answer:

1. £250,000
2. £370,000
3. £385,000
4. £400,000

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 2

1. Not correct
2. Correct = £465,000 – (1,000,000 £1 shares * 8%) – (£300,000 5% debentures) = = > £465k – £80k – £15k
3. Not correct
4. Not correct

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