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Promulgate’s trial balance as at 31 Dec ., 2015 showed a credit amounts of $500,000,000 and $80,000,000 against the $1 equity shares and the share premium account respectively. On 1 Sept, 2015 promulgate had correctly accounted for a fully subscribed 1 for 4 rights issue at an exercise price of $1.20 each.
Promulgate had paid two dividends in the year. The first dividend payment of 4 cents per share was in March and the second dividend payment of 2.5 cents per share was paid in November.
What was the total dividend payment made by promulgate during the year end 31 Dec , 2015?
Answer according to opentuition without computions is $28,500,000.
What did you do to arrive at that answer Mr. Chris my name sake ?
Hi,
Use the dates in the question to work out the number of shares that were in issue when the 4 cents per share dividend was paid, and the number when the 2.5 cents per share dividend was paid. You can then work out the total dividend for each of the tow dates and add them up.
See how you get on and I’ll then give you the answer.
Thanks
1st DIVIDEND PAID IN MARCH
3/12 * number of share in issue 145,000,000 *4cent = $14,500,000
Second dividend paid in November
2/12 * number of share in issue * 2.5cent = $ 6,041,676
TOTAL = $ 20,541676.
I still did not know what i am missing here. Please assist on this.
Let’s start with the second dividend of 2.5 cents per share as it is easier. You can work out the number of shares from the TB information and then apply it to the 2.5 cents per share. I’m not sure what you’re doing with the 2/12 figure as it has no relevance here. Try it and once you’e given me the answer and worked it out we can move on to the second first dividend.
Thanks
My exams is just few weeks from now . Could you please assist me so to ease my nerves and pressure ?
@iyamu said:
No of share 625,000,000 * 2.5 = $ 1,562,500Why are you using 625,000,000 as the number of shares? The TB gives us the figure of $500,000,000 shares of $1 each so there must be 500,000,000 shares in issue. To get the dividend paid we multiply this by the 2.5 cents per share. I think this gives us $12,500,000.
You now need to work out the number of shares that were in issue prior to the 1 for 4 rights issue of shares. Have a go and see how you get on.
Thanks
@iyamu said:
My exams is just few weeks from now . Could you please assist me so to ease my nerves and pressure ?This is one tiny bot of the syllabus that might not even appear in the exam, so try not to get nervous about it.
Thanks
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