Use the following information to answer the given question. \(\begin{array}{c|c} \text{Net profit for the year} & N75.000\\ \text{Ordinary share capital of ...

Use the following information to answer the given question.
\(\begin{array}{c|c} \text{Net profit for the year} & N75.000\\ \text{Ordinary share capital of 50 kobo each} & N65,000\\ \text{10% Preference shares of 50 kobo each} & N100,000\end{array}\)
Preference dividend for the year is

Answer Details

Preference shares are a type of shares in a company that pay a fixed dividend each year. The dividend rate for preference shares is usually expressed as a percentage of the face value of the share. In this case, the company has 10% preference shares with a face value of 50 kobo each and a total value of N100,000. Therefore, the total amount of preference dividends to be paid for the year is: N100,000 x 10% = N10,000 Hence, the correct answer is C, N10,000, which is the preference dividend for the year. Note that preference dividends must be paid before any dividends can be paid to ordinary shareholders. In this case, the net profit for the year is N75,000, but the preference dividend payment of N10,000 must be made first, leaving N65,000 available for distribution as dividends to the ordinary shareholders.