We read your photo as:

A) Authorised share capital is the maximum number of shares that a company is legally permitted to issue to the public, as specified in its memorandum of association or articles of incorporation

Economics

ScanSolve AI Answer

Answers

2 parts
d(i)

S1,600\text{S}1,600

d(ii)

S700\text{S}700

Step-by-step solution

4 steps

Here are the explanations and calculations for the given questions:

a) Authorised share capital is the maximum number of shares that a company is legally permitted to issue to the public, as specified in its memorandum of association or articles of incorporation. It represents the upper limit of the company's share capital.

b) Issued share capital is the portion of the authorised share capital that has actually been issued and allotted to shareholders. It represents the total nominal value of shares that have been sold or distributed to investors.

Part c

  • Similarity: Both preference shares and debentures typically offer a fixed rate of return to their holders (dividends for preference shares, interest for debentures).
  • Difference: Preference shares represent equity (ownership) in the company, while debentures represent debt (a loan) to the company. Debenture holders are creditors, whereas preference shareholders are owners.

Part d(i)

S1,600\text{S}1,600

Total dividend proposed on ordinary shares

  1. Calculate the total nominal value of issued ordinary shares.

    Total nominal value of ordinary shares=Number of issued ordinary shares×Par value per share\text{Total nominal value of ordinary shares} = \text{Number of issued ordinary shares} \times \text{Par value per share} Total nominal value of ordinary shares=20,000 shares×S1/share=S20,000\text{Total nominal value of ordinary shares} = 20,000 \text{ shares} \times \text{S}1/\text{share} = \text{S}20,000

  2. Calculate the ordinary dividend based on the proposed rate.

    Ordinary dividend=Total nominal value of ordinary shares×Dividend rate\text{Ordinary dividend} = \text{Total nominal value of ordinary shares} \times \text{Dividend rate} Ordinary dividend=S20,000×8%=S1,600\text{Ordinary dividend} = \text{S}20,000 \times 8\% = \text{S}1,600

    The total dividend proposed on ordinary shares is S1,600\boxed{\text{S}1,600}.

Part d(ii)

S700\text{S}700

Total dividend payable on preference shares

  1. Calculate the total nominal value of issued preference shares.

    Total nominal value of preference shares=Number of issued preference shares×Par value per share\text{Total nominal value of preference shares} = \text{Number of issued preference shares} \times \text{Par value per share} Total nominal value of preference shares=40,000 shares×S0.25/share=S10,000\text{Total nominal value of preference shares} = 40,000 \text{ shares} \times \text{S}0.25/\text{share} = \text{S}10,000

  2. Calculate the preference dividend based on the fixed rate.

    Preference dividend=Total nominal value of preference shares×Dividend rate\text{Preference dividend} = \text{Total nominal value of preference shares} \times \text{Dividend rate} Preference dividend=S10,000×7%=S700\text{Preference dividend} = \text{S}10,000 \times 7\% = \text{S}700

    The total dividend payable on preference shares is S700\boxed{\text{S}700}.

Was this helpful?

Try one yourself

A new problem that tests the same skill.

Still stuck on this one?

Ask a follow-up, and the answer starts from this question.

Got a different question?Ask your own question

More Economics Questions

QAuthorized capital is the maximum capital a company is allowed to raise. Issued capital is the…QPart of a company's authorised capital that is offered to the public for subscription is known asQWhat is the term for the part of a company's authorized capital that is offered to the public for…Q1.1. C 1.1.2. F 1.1.3. D 1.1.4. A 1.1.5. B 1.1.6. E. 2.1.1. Define Authorised Shares and calculate…QABC Ltd issued 10,000 Shares of £10 each at par. Fully subscribed and paid. I. Journalize the issue…
See all Economics questions →
Got a syllabus? Photograph it and I'll tell you what's due and what's worth the most.
Handwritten step-by-step solution preview

Handwritten Step-by-Step Solution

Get this as a handwritten image on WhatsApp — like a tutor wrote it for you.

Try on WhatsApp