SSPD Limited has 15 000 of ordinary share capital in £1 shares.Joan owns 6% of the shares.In addition, she owns 50% of the 8% cumulative preference share capital of £10 000 issued by the company several years ago.In the financial year ended 31 March 20X6 the company was unable to pay its preference dividend.However, it was able to meet its obligations in full in the financial year ended 31 March 20X7, in addition to paying an ordinary dividend of 10p per share.How much dividend did Joan receive in the financial year ended 31 March 20X7?

Question

Quizplus · Accepted Answer

Joan owns 6% of the ordinary shares, which is 6% of 15,000 shares = 900 shares. The ordinary dividend is 10p per share, so she receives 900 shares * £0.10 = £90 from ordinary shares. She also owns 50% of the £10,000 preference share capital, which is £5,000. The preference dividend rate is 8%, so she receives £5,000 * 8% = £400. Since the preference dividend was not paid in the previous year, it is cumulative, and she receives another £400 for that year. Therefore, her total dividend is £90 (ordinary) + £400 (preference for 20X7) + £400 (preference for 20X6) = £890.

SSPD Limited Has 15 000 of Ordinary Share Capital in £1