Answer To Accounting Test Question No. Ltd 1 On Limited Companies-Profit & Loss Appropriation Account

October 11, 2008 by

The question on this limited company asked for a simple preparation of the Profit & Loss Appropriations where the dividends are considered.

Jim Ltd

Profit & Loss Appropriation for the year ended 31 December Year 8

	$	$
Net Profit		41,500
Add: Retained profit b/d		17,300
		58,800
Less: Appropriation
Interim ordinary dividend (given)	10,000
Proposed ordinary dividend(W1)	16,000
Proposed Preference dividend(W2)	6,000	32,000
Retained profit c/d		26,800

Workings:

W1 Proposed ordinary dividend=$200,000 x $0.08 =$16,000

W2 Proposed Preference dividend=$60,000 x 10% =$6,000