June 2005 p3 A-level Accounting MCQ

[dasani]

(12) A business has the following assets and liabilities.
$
fixed assets 25 000
current assets stock 13 000
debtors 18 500
current liabilities 17 000
A company agrees to purchase the business by issuing $0.50 shares at par for the agreed price.
The agreement is that all assets and liabilities will be taken over at the above values, subject to
the following adjustments:
allowance for stock loss $1500
bad debts $500
goodwill, valued at $10 000
What is the number of shares to be issued to satisfy the purchase price?

help me

 

[sher_sam010]

Net Assets = 25000+13000+18500-17000-500(Bad debt)
= 39000
Goodwill = 10000

Now, 10000= ( x (let) +1500 (allowance for stock loss) ) - 39000
x = 47500
Number of shares = 47500*2 = 95000 Since value of each share is 0.5