Plants Limited runs a garden centre business selling garden plants and products to the public from its
Question:
Plants Limited runs a garden centre business selling garden plants and products to the public from its busy edge of town site. In the year to 31 October 2016, Plants Limited’s issued share capital consists of 100,000 ordinary shares of 50 pence each and 100,000 preference shares of £1 each. The preference share dividend rate is 6%. Preference dividends are payable on 31 October each year. An interim dividend of 10 pence per share was paid on the ordinary share capital on 15 May 2016 and the directors paid a final ordinary dividend of 20 pence per ordinary share on 15 October 2016.
Required
(a) Calculate the preference dividend that Plants Limited will pay for the year ended 31 October 2016.
(b) Calculate the total ordinary dividend for the year ended 31 October 2016.
(c) If retained earnings at 1 November 2015 were £45,000 and profit for the year to 31 October 2016 was £50,000, what is the balance on retained earnings after dividends have been paid at 31 October 2016?
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