2023 - JAMB Accounting Past Questions and Answers - page 2

To calculate the amount of preference shares dividends payable at the end of the year, we need to consider the 5% preference shares and the net profit available for distribution.

First, calculate the annual preference shares dividends:

Preference Shares Dividends = Number of Preference Shares * Par Value per Share * Dividend Rate
Preference Shares Dividends = 150,000 * ₦1 * 5% = ₦7,500

Now, let's calculate the net profit available for distribution to both ordinary and preference shareholders:

Net Profit = Net Profit for the Year - Interim Dividends Paid - Profit and Loss Appropriation b/f - Goodwill Written Off
Net Profit = ₦90,000 - ₦25,000 - ₦10,000 - ₦1,000 = ₦54,000

Now, we need to allocate this net profit between ordinary and preference shareholders. First, we pay the preference shareholders their fixed dividend:

Preference Shareholders Dividend = ₦7,500

Next, we allocate the remaining profit to ordinary shareholders:

Ordinary Shareholders Dividend = Net Profit - Preference Shareholders Dividend
Ordinary Shareholders Dividend = ₦54,000 - ₦7,500 = ₦46,500

So, the amount of preference shares dividends payable at the end of the year is ₦7,500

Depreciation of office machines in manufacturing is considered an operating expense, and it is charged to the profit and loss account. This reflects the decrease in the value of the office machine over time due to its use in the manufacturing process and helps in determining the true profitability of the manufacturing operations.

The features of a receipts and payment account include:

II. Payments of liabilities are effected.
III. The account does not show if cash payment is revenue or capital expenditure.
IV. It performs the same function as a cash book

Subscription in advance represents revenue that has been received in advance for services or products that will be provided in the future. Since it is a liability for the company, it is categorized as a current liability on the balance sheet until the services or products are delivered or the obligation is fulfilled.

The memorandum of association is a legal document that serves as the charter or constitution of a company. It defines the company's scope of operations, its objectives, and the limits within which it can operate. It is a fundamental document required for the incorporation of a company and outlines the company's relationship with its shareholders and stakeholders.

The appropriation account is the account in a partnership where profits are distributed to the partners in their profit-sharing ratio. It records the allocation of profits for various purposes such as partners' salaries, interest on capital, and any other special or agreed-upon allocations before the remaining profit is distributed to the partners according to their profit-sharing ratio.