Practice Activity 9.14 Treatment of preference shares in a Limited Liability Company’s financial sta
- Adaeze Nwobu
- Apr 11, 2023
- 1 min read
Agift Design Limited was incorporated on 1 November 2018. On 1 November 2019, the Company issued ₦80,000 12% preference shares of ₦1 each. The dividend is payable half annually.
Required: Calculate the dividend that Agift Design Limited will pay the preference shareholders during the accounting period ended 31 October 2020.
See the suggested answer to practice activity 9.14 here.
Suggested answer to practice activity 9.14
Dividends to preference shareholders are paid on 30 April 2020 and 31 October 2020.
The first set of dividends is paid on 30 April 2020 and is calculated as follows:
80,000*12%*6/12
= ₦4,800
The second set of dividends is paid on 31 October 2020 and is calculated as follows:
80,000*12%*6/12
= ₦4,800
The total amount of dividends paid to preference shareholders is ₦9,600. Therefore, Agift Design Limited will pay the preference shareholders ₦9,600 as dividends during the accounting period ended 31 October 2020.
Comments