If a company has a share capital of $150,000, revenue reserves of $25,000 and retained profits of $50,000, what is the maximum amount it can legally distribute as cash dividends?

Question

Quizplus · Accepted Answer

The maximum amount a company can legally distribute as cash dividends is the amount available from their profits, which would be the sum of revenue reserves and retained profits. Therefore, the maximum amount the company can distribute as cash dividend is $75,000 ($25,000 revenue reserves + $50,000 retained profits).

If a Company Has a Share Capital of $150,000, Revenue