Waec Model Questions Vol1 2017 Commerce Question 10

Practice objective / multiple choice question 10 from the 2017 Waec Model Questions Vol1 Commerce examination.

Waec Model Questions Vol1 2017 Commerce Objective / Multiple Choice Medium Difficulty
Question 10 WAEC_MODEL_QUESTIONS_VOL1 • 2017 • COMMERCE • objective

A partnership of three persons A, B and C runs a trading business with total assets of ₦5,000,000 and total liabilities of ₦3,200,000. Their profit‑sharing ratio is 2 : 1 : 1 respectively. They decide to incorporate as a private limited company with a share capital of ₦2,000,000 divided into shares of ₦100 each. The partners subscribe to shares in the same ratio as their profit‑sharing. After incorporation the company takes a loan of ₦1,500,000 at 10 % interest per annum. Assuming the company assumes all existing liabilities, determine (a) the number of shares each former partner holds, (b) the amount of capital each contributes, and (c) the maximum personal liability each partner faces for the company's liabilities after incorporation.

Answer Options

A. A: 8,000 shares (₦800,000); B: 6,000 shares (₦600,000); C: 6,000 shares (₦600,000). Personal liability = ₦0 for each partner.
B. A: 10,000 shares (₦1,000,000); B: 5,000 shares (₦500,000); C: 5,000 shares (₦500,000). Personal liability = ₦200,000 for each partner.
Correct Answer C. A: 10,000 shares (₦1,000,000); B: 5,000 shares (₦500,000); C: 5,000 shares (₦500,000). Personal liability = ₦0 for each partner.
D. A: 10,000 shares (₦800,000); B: 5,000 shares (₦400,000); C: 5,000 shares (₦400,000). Personal liability = ₦0 for each partner.
Correct Answer
C
Correct Option:
A: 10,000 shares (₦1,000,000); B: 5,000 shares (₦500,000); C: 5,000 shares (₦500,000). Personal liability = ₦0 for each partner.

About This Question

This is Waec Model Questions Vol1 2017 Commerce Question 10. It is one of the objective questions from the 2017 Waec Model Questions Vol1 Commerce examination.

Difficulty level: Medium .

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