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Note : DP means Down Payment. At the time of last instalment, interUSt i5 une, Instalments Amount Less Opening Cash Price., Illustration (Cash Price, Instalment Amount and Interest Rate Given), Mr. Shashi bought a refrigerator under hire purchase system for a cash price of 15,675 with the, following terms., (a) 4,500 to be paid on signing the agreement., (b) Balance to be paid in three equal instalments of 4,500 at the end of each year., (c) The rate of interest charged for the hire purchase is 10% per annum., Calculate the amount of instalment interest., Solution :, Scanned By Scanner Go
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UIe vtyiiIiy ui secona instalment. 3 7,793 - Seconu iislalion v-, 9. Last Instalment Interest = (Last instalment. 3 4.500 – Unpaid cash price balance at the beginning, of last instalment 4,072) = 428., Illustration 4) (Cash Price and Instalment Amount Given), Cash price of an asset is ? 56,000, and the hire purchase price of the same asset is 60,000, payable 15,000 as down payment and the balance in three equal instalments at 15,000. Calculate, instalment interest and split the instalment amount into instalment cash price and instalment interest., Solution :, DP + Instalments paid = 15,000 + (3 x 15,000) = 7 60,000, Total Interest = (Hire Purchase Price, 60,000 – Cash Price, 56,000) = 4,000., Hire Purchase Price, %3D, %3D, Scanned By Scanner Go
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Balance Sheets of Autoriders Company (Extracts), Liabilities, Assets, 2011, 2012, 2013, Current Assets :, Car Mart Company 18,613, 9,544, Nil, Illustration 9): (Four Instalments), On 1-1-2010 M has purchased a machinery from A and paid < 8,000 at the time of delivery. The cash, price was 48,000. The balance amount was paid in the following four instalments on the 31st, December every year with interest @ 5% on cash price : 12,000 on 31-12-2010; 11,500 on, 31-12-2011; 11,000 on 31-12-2012; and ? 10,500 on 31-12-2013. Machinery was to be depreciated, at 10% p.a. on reducing balance method., Prepare Machinery A/c and Vendor's A/c in the books of M. Use Full Cash Price (Credit Purchase), method., Solution :, IN THE BOOKS OF M, (Full Cash Price / Credit Purchase Method), Machinery Account, Cr., Dr., Date, Particulars, Date, Particulars, 2010, 2010, 48,000, Dec. 31 By Depreciation, 4,800, To A's A/c, Dec 31, Ry Balance cld, 43 200, Scanned By Scanner Go
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10,000, (3) Interest @ 5% P. A. on (1), (4) Cash Price Paid (2 3), (5) Closing Cash Price (1 - 4), 8,000, 40,000, 10,000|, 30,000, 20,000, 10,000, Nil, (2) Calculation of Depreciation, 2010, 2011, 2012, 2013, Particulars / Year, 43,200, 4,320, 38,880, 3,880, 34,992, 48,000, 4,800, Opening W. D. V. (Jan. 1), Less : Depreciation @ 10% on Opening W. D. V., = Closing W. D. V. (Dec. 31), 3,499, 43,200, 38,880, 34,992, 31,493, %3D, Illustration f0, The Loksewa Transport Ltd. purchased trucks from the Hindustan Motors Ltd., on Hire Purchase, Basis. The cash price of the trucks was 3,20,000. The amounts were payable as under :-, < 1,00,000 on the date of purchase i.e. Ist January, 2011, 7 80,000 on 31st December, 2011, 7 80,000 on 31st December, 2012, 7 82,478 on 31st December, 2013, The Hindustan Motors Ltd., charged interest at 5% p.a. on the unpaid amount. The purchasing, company decided to write off as depreciation 20% on the diminishing balance each year. You are, required to give Trucks Account, The Hindustan Motor Ltd. Account and Interest Account in books, of the Loksewa Transport Ltd., according to Credit Purchase Method., 038 60, Scanned By Scanner Go
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31-12-12| To Hindustan Motors A/c, UIors A/c, 11,000 31-12-11 By Profit & Loss A/c, Particulars, 31-12-13, To Hindustan Motors A/c, 7,550 31-12-12 By Profit & Loss A/c, 11,000, Working Note :, calculation of Interest, 3,928 31-12-13 By Profit & Loss A/c, 7,550, 3,928, Particulars / Inst. No., Down, 1, 2, 3, Payment, (1) Opening Cash Price, (2) Instalment Amount, (3) Interest @ 5% P.A. On (1), (4) Cash Price Paid (2 - 3), (5) Closing Cash Price (1 - 4), 3,20,000 2,20,000, 1,00,000, 1,51,000, 78,550, 80,000, 80,000, 82,478, 11,000, 69,000, 2,20,000 1,51,000, 7,550, 72,450, 78,550, 3.928, 1,00,000, 78,550, Illustration 11. (Instalments excluding interest), Jaysons purchased a printing machine from Samson Printers on Hire-purchase basis on 1st July,, 2011. The terms of the contract were as follows :-, (i) The cash price of the machine was 75,000, (ii) 15,000 was paid on signing the contract on 1st July, 2011., (iii) The balance was paid in instalment of 20,000 plus interest at 15% per annum., (iv) The instalment were paid on 31st December every year commencing from 31st December, 2011., Jaysons charged depreciation at 20% p.a. under S.L.M. They closed their books on 31st, December. Show in books of Jaysons necessary accounts., (IDOL, Nov. 2000, Oct. 05, adapted), Solution :, IN THE BOOKS OF JAYSONS, Cr., 0.0 00 deso) Printing Machinery Account, T Danticulare, Dr., Date, Particularsa, :-ian Alc 120%), 7.500, Scanned By Scanner Go
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