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WAEC Accounting 2019 Paper

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Question : 14

Total: 45

The directors of Olu Ltd. recommended a dividend of 10% on 1,000,000 ordinary share capital of N2.00 each. The amount of dividend declared is

N200,000
N100,000
N20,000
N10,000

Solution:

Concept:

Dividend is calculated as a percentage of the total paid-up share capital.

Explanation:

First, find the total ordinary share capital.

Total shares =

1,000,000

shares.

Nominal value per share =

\mathrm{N}2.00

.

So, total share capital =

1,000,000 \times \mathrm{N}2.00 = \mathrm{N}2,000,000

.

Dividend rate =

10\% = \frac{10}{100}

.

Dividend declared =

10\%

of

\mathrm{N}2,000,000

.

Dividend declared =

\frac{10}{100} \times 2,000,000 = \mathrm{N}200,000

.

Answer:

\mathrm{N}200,000

(Option A).

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