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    Question

    On 31 March 2025, XYZ Ltd. declares a final dividend of

    ₹5 per share on 10 lakh shares. The company’s policy is to transfer 10% of current year profits to general reserve before declaring dividends. If profit after tax for FY 25 is ₹8 crore, compute the transfer to reserve and dividend payable (excluding DDT).
    A ₹90 lakh to reserve; ₹50 lakh dividend Correct Answer Incorrect Answer
    B ₹80 lakh to reserve; ₹5 crore dividend Correct Answer Incorrect Answer
    C ₹80 lakh to reserve; ₹50 lakh dividend Correct Answer Incorrect Answer
    D ₹8 lakh to reserve; ₹5 crore dividend Correct Answer Incorrect Answer
    E None Correct Answer Incorrect Answer

    Solution

    • Transfer to reserve = 10% × ₹8 crore = ₹80 lakh. • Dividend = ₹5 × 10 lakh shares = ₹50 lakh.

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