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JAMB Principles of Accounts 2003 Question 41

Question 41

Partnership Admission, Retirement and Dissolution

For the purpose of conversion of a partnership to a company, a total purchase consideration of ₦3.6m was paid. If 30% of the purchase consideration was in cash and the rest by 50k shares, how many shares were issued?

  1. A.1 080 000
  2. B.2 160 000
  3. C.3 600 000
  4. D.5 040 000
Show the answer and explanation

Answer: D (5 040 000)

Explanation

Shares part = 70% × 3.6m = ₦2.52m. At 50k each: 2 520 000 ÷ 0.50 = 5 040 000 shares.