JMJ Limited has an issued share capital of £700,000 made up of 200,000 preference shares of £1 each and 500,000 ordinary shares of £1 each. During the financial year ended 31 October 2019. JMJ paid the preference dividend of 5% and an ordinary dividend of 7.5 pence per share. The profit for the year was £105,000 and the retained earnings at the start of the year were a retained loss of £25,000. What is the balance on retained earnings at 31 October 2019?

Question

Quizplus · Accepted Answer

Preference dividend = 200,000 x £1 x 5% = £10,000Ordinary dividend = 500,000 x 7.5p = £37,500Total dividends = £10,000 + £37,500 = £47,500Retained earnings at 31 October 2019 = £105,000 - £47,500 - £25,000 = £32,500

JMJ Limited Has an Issued Share Capital of £700,000 Made