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WAEC Financial Accounting 2000 Question 15

Question 15

Purchase of Business

XYZ Enterprises bought ABC Enterprises by issuing 30,000 ordinary shares of N1 each at a discount of 5%. The assets of ABC Enterprises are Stock N18,000, Debtors N11,000
The purchase consideration was

  1. A.N31,500
  2. B.N30,000
  3. C.N28,500
  4. D.N28,000
Show the answer and explanation

Answer: C (N28,500)

Explanation

30,000 shares × N0.95 = N28,500.