Answer To Accounting Test Question No. Ltd 2 On Limited Companies-Profit & Loss Appropriation Account

October 11th, 2008 Comments off
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The question on this limited company asked for a simple preparation of the Profit & Loss Appropriations where the dividends are considered.

Answer Paper to Accounting Test Question No.Ltd 2 on Limited Companies

Jim Ltd

Profit & Loss Appropriation for the year ended 31 December 2007

$

$

Net Profit

900,000

Add: Retained profit b/d

50,000

950,000

Less: Appropriation

Interim dividend for:

Preference share

5,000

Ordinary share

100,000

Proposal dividend for:

Preference share (W1)

5,000

Ordinary share(W2)

100,000

Transfer to Fixed Assets Replacement Reserve

60,000

270,000

Retained Profit C/f

680,000

Workings:

W1 Preference share dividend for the year

=$100,000 x 10%=$10,000 per annum

=$10,000-$5,000=$5,000

Therefore the director recommend $5,000 for preference share dividend.

W2 Proposed ordinary share dividend=$0.5 x 200,000 per unit=$100,000

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Financial Accounting

 
 

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