The following financial information was extracted from the books of Zaria Foods Plc for the year ended 31st December 2025:
| Financial Item | Amount (₦) |
|---|---|
| Authorized Share Capital (1,000,000 Ordinary shares of ₦1.00 each) | 1,000,000 |
| Issued and Paid-up Ordinary Share Capital (600,000 shares of ₦1.00 each) | 600,000 |
| 10% Preference Share Capital (200,000 shares of ₦1.00 each) | 200,000 |
| Retained Profit brought forward (1st January 2025) | 45,000 |
| Net Profit for the year ended 31st December 2025 | 250,000 |
The directors resolved to transfer ₦30,000 to the General Reserve, pay the preference dividend in full, and declare a 12% dividend on ordinary shares.
What is the retained profit carried forward to the next financial year?
- ₦173,000Answer
- B₦125,000
- C₦128,000
- D₦193,000
Answer
The retained profit carried forward to the next financial year is ₦173,000.
The total profit available for appropriation is ₦295,000 (current net profit of ₦250,000 plus retained profit brought forward of ₦45,000). Total appropriations comprise the preference dividend of ₦20,000 (10% of ₦200,000), ordinary share dividend of ₦72,000 (12% of ₦600,000 paid-up capital), and general reserve transfer of ₦30,000, totaling ₦122,000. Subtracting ₦122,000 from ₦295,000 leaves a retained profit carried forward of ₦173,000.
Step-by-Step Solution
Key Concept
Profit and Loss Appropriation Account and Dividend Distribution