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COMPOSED BY: GHANWA SHOUKAT

M.COM (PREVIOUS)
DATE: 24-MARCH-2015
JINNAH DEGREE COLLEGE OF
COMMERCE&MANAGEMENT SCIENCES

CHAPTER#4
HIRE PURCHASE ACCOUNTS
SECTION A: CASH PRICE IS GIVEN

1. IN THE BOOKS OF SHARDA


GENERAL JOURNAL

DATE PARTICULARS DEBIT CREDIT


1-JAN-1999 MACHINE A/c 10000
TO KUSUM A/C 10000
1-JAN-1999
(BEING THE PURCHASE OF MACHINE FROM KUSUM)
KUSUM A/C 4000
4000
TO BANK A/C
(BEING AMOUNT PAID ON SIGNING CONTRACT)
31-JAN-1999
INTEREST A/C
TO KUSUM A/C 300
300
(BEING INTEREST PAYABLE TO KUSUM)
31-JAN-1999 KUSUM A/C
TO BANK A/C
31-JAN-1999 2300 2300
(BEING PAYMENT OF 1ST INSTALLMENT TON KUSUM)
DEPRECIATION A/C
31-JAN-1999
TO BANK A/C 500 500
(BEING DEPRECIATION CHARGED ON MACHINE)
PROFIT AND LOSS A/C
31-JAN-2000
TO DEPRECIATION A/C 800 500
31-JAN-2000 TO INTEREST A/C 300
(BEING DEP&INTEREST CHARGED TO PROFIT AND LOSS)
INTEREST A/C
31-JAN-2000
TO KUSUM A/C 200 200
(BEING INTEREST PAYABLE TO KUSUM)
31-JAN-2000 KUSUM A/C
2200 2200
TO BANK A/C
(BEING PAYMENT OF 2ND INSTALLMENT)
31-JAN-2001
DEPRECIATION A/C
500 500
TO MACHINE A/C
(BEING DEPRECIATION CHARGED TO MACHINE)
31-JAN-2001 PROFIT AND LOSS A/C
700 500
TO DEPRECIATION A/C
200
31-JAN-2001 TO INTEREST A/C
(BEING DED&INTEREST CHARGED TO P&L A/C)

31-JAN-2001 INTEREST A/C


TO KUSUM A/C 100 100
(BEING INTEREST PAYABLE TO KUSUM)
KUSUM A/C
TO BANK A/C 2100 2100
(BEING PAYMENT OF FINAL INSTALLMENT)
DEPRECIATION A/C
TO MACHINE A/C 500 500
(BEING DEPRECIATION CHARGED TO MACHINE)
PROFIT AND LOSS A/C
TO DEPRECIATION A/C 600 500
100
TO INTEREST A/C
(BEING DEP&INTEREST CHARGED TO P&L A/C)

WORKING:
CALCULATION OF INTEREST
CASH PRICE=10000
(-)DOWN PAYMENT= (4000)
BALANCE = 6000
INTEREST IN 1999=6000*5%=300
INTEREST IN 2000
BALANCE-1ST INSTALLMENT=6000-2000=4000*5%=200
INTEREST=200
INTEREST IN 2001
BALANCE-2ND INSTALLMENT=4000-2000=2000*5%=100
INTEREST=100

CALCILATION OF DEPRECIATION
STRAIGHT LINE METHOD
10000*5%=500

IN THE BOOKS OF SHARDA


DR MACHINE ACCOUNT CR

DATE PARTICULARS AMOUN DATE PARTICULARS AMOUN


T T
1-JAN-1999 TO KUSUM 10000 31-DEC- BY DEPRECIATION 500
1999

BY BALANCE C/D 9500


31-DEC-
1999

TOTAL 10000 TOTAL 10000

1-JAN-2000 TO BALANCE B/F 9500 31-DEC- BY DEPRECIATION 500


2000

31-DEC-
BY BALANCE 9000
2000

TOTAL 9500 TOTAL 9500


1-JAN-2001 TO BALANCE B/F 9000 31-DEC BY DEPRECIATION 500
-2001

31-DEC-
2001 BY BALANCE 8500

TOTAL 9000 TOTAL 9000

KUSUM
ACCOUNT
DR

CR
DATE PARTICULARS AMOUN DATE PARTICULAR AMOUN
T S T
1-JAN-1999 TO BANK 4000 1-JAN- BY MACHINE 10000
1999
31-DEC-1999

31-DEC-1999 TO BANK 2300 31-DEC- BY INTEREST 300


1999

TO BALANCE C/D 4000

TOTAL 10300 TOTAL 10300


31-DEC-2000 TO BANK A/C 2200 1-JAN- BY BALANC B/D 4000
2000
31-DEC-2000

TO BALANCE C/D 2000 31-DEC- BY INTEREST 200


2000

TOTAL 4200 TOTAL 4200


31-DEC-2001 TO BANK 2100 31-DEC- BY BALANCE B/D 2000
2001

31-DEC- BY INTEREST 100


2001

TOTAL 2100 TOTAL 2100

DR DEPRECIATION ACCOUNT CR

DATE PARTICULAR AMOUN DAT PARTICULAR AMOUN


S T E S T
31-DEC-1999 TO MACHINE 500 31-DEC- BY PROFIT&LOSS 500
1999

TOTAL 500 TOTAL TOTAL


31-DEC-2000 TO MACHINE 500 31-DEC- BYB PROFIT&LOSS 500
2000

TOTAL 500 TOTAL 500

31-DEC-2001 TO MACHINE 500 31-DEC- BY PROFIT&LOSS 500


2001

TOTAL 500 TOTAL 500

IN THE BOOKS OF KUSUM


GENERAL JOURNAL

DATE PARTICULARS DEBIT CREDIT


1-JAN-1999 SHARDA A/C 10000
TO MACHINE A/C 10000
1-JAN-1999
(BEING HIRE SALE OF MACHINE TO SHARDA)
BANK A/C 4000
TO SHARDA A/C 4000
31-JAN-1999
(BEING AMOUNT RECEIVED ON SIGNING CONTRACT)
SHARDA A/C
31-JAN-1999 TO INTEREST 300
300
(BEING INTEREST RECEIVABLE FROM SHARDA)

BANK A/C 2300


31-JAN-1999 TO SHARDA A/C 2300
(BEING 1ST INSTALLMENT RECEIVED WITH INTEREST)
INTEREST A/C 300
31-JAN-2000 TO PROFIT AND LOSS A/C 300
(BEING INTEREST TRANSFERRED TO P&L)
SHARDA A/C
31-JAN-2000
TO INTEREST
200
(BEING INTEREST RECEIVABLE FROM SHARDA) 200
31-JAN-2000 BANK A/C
TO SHARDA A/C 2200
31-JAN-2001 (BEING 2ND INSTALLMENT RECEIVED WITH INTEREST) 2200

INTEREST A/C
31-JAN-2001 TO PROFIT AND LOSS A/C 200
(BEING INTEREST CHARGED TO P&L) 200

31-JAN-2001 SHARDA A/C


TO INTEREST A/C 100
(BEING INTEREST RECEIVABLE FROM SHARDA) 100

BANK A/C
TO SHARDA A/C 2100
(BEING 3RD INSTALLMENT RECEIVED) 2100

INTEREST A/C
TO PROFIT AND LOSS A/C 100
(BEING INTEREST CHARGED TO P&L) 100

IN THE BOOKS OF KUSUM


DR SHARDA ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO MACHINE 10000 1-JAN- BY BANK 4000
1999
31-DEC-1999
31-DEC-
TO INTEREST 300 BY BANK 2300
1999

31-DEC- BY BALANCE C/D 4000


1999

TOTAL 10300 TOTAL 10300


1-JAN-2000 TO BALANCE B/D 4000 31-DEC- BY BANK 2200
2000
31-DEC-2000
31-DEC-
TO INTEREST 200 BY BALANCE 2000
2000

TOTAL 4200 TOTAL 4200


1-JAN-2001 TO BALANCE C/D 2000 31-DEC- BY BANK 2100
2001
31-DEC-2001

TO INTEREST 100

TOTAL 2100 TOTAL 2100

DR INTEREST ACCOUNT CR

DATE PARTICULAR AMOUN DATE PARTICULARS AMOUNT


S T
31-DEC-1999 TO KUSUM 300 31- BY PROFIT&LOSS 300
DEC-
1999

TOTAL 300 TOTAL 300


31-DEC-2000 TO KUSUM 200 31-DEC- BY PROFIT&LOSS 200
2000

TOTAL 200 TOTAL 200


31-DEC-2001 TO KUSUM 100 31-DEC- BY PROFIT&LOSS 100
2001

TOTAL 100 TOTAL 100

2.

WORKING:

CALCULATION OF INTEREST

RATE OF INTEREST=5%

CASH PRICE OF MACHINE=20000

(-)DOWN PAYMENT = (5000)

BALANCE =15000

INTEREST IN 1998=15000*5%=750

INTEREST IN 1999

BALANCE-1ST INSTALLMENT= 15000-5000=10000*5%=500

INTEREST=500

INTEREST IN 2000

BALANCE-2ND INSTALLMENT=10000-5000=5000*5%=250

INTEREST=250

IN THE BOOKS OF A LTD

DR MACHINE ACCOUNT CR
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-APRIL- TO B ACCOUNT 20000 31-DEC- BY DEPRECIATION 2000
1998 1998
31-DEC-
1998 BY BALANCE 18000
TOTAL 20000 TOTAL 20000
1-JAN-1999 TO BALANCE 18000 31-DEC- BY DEPRECIATION 2000
1999
31-DEC-
1999 BY BALANCE 16000
TOTAL 18000 TOTAL 18000
1-JAN- TO BALANCE 16000 31-DEC- BY DEPRECIATION 2000
2000
2000 31-DEC-
2000 BY BALANCE 14000
TOTAL 16000 TOTAL 16000
IN THE BOOKS OF A LTD

DR B ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-APRIL- TO BANK 5000 1-APRIL- BY MACHINE 20000
1998 1998
31-DEC-
1998 TO BANK 5750 31-DEC- BY INTEREST 750
31-DEC- 1998
1998 TO BALANCE 10000
TOTAL 20750 TOTAL 20750
31-DEC- TO BANK 5500 1-JAN- BY BALANCE 10000
1999 1999
31-DEC-
1999 TO BALANCE 5000 31-DEC- BY INTEREST 500
1999
TOTAL 10500 TOTAL 10500
31-DEC- TO BANK 5250 1-JAN- BY BALANCE 5000
2000 2000
31-DEC-
2000 BY INTEREST 250
TOTAL 5250 TOTAL 5250
IN THE BOOKS OF A LTD

DR INTEREST ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


31-DEC- TO B A/C 750 31-DEC- BY PROFIT&LOSS 750
1998 1998
TOTAL 750 TOTAL 750
31-DEC- TO B A/C 500 31-DEC- BY PROFIT&LOSS 500
1999 1999
TOTAL 500 TOTAL 500
31-DEC- TO B A/C 250 31-DEC- BY PROFIT&LOSS 250
2000 2000
TOTAL 250 TOTAL 250

IN THE BOOKS OF A LTD

DR DEPRECIATION ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


31-DEC- TO MACHINE 2000 31-DEC- BY PROFIT&LOSS 2000
1998 1998
TOTAL 2000 TOTAL 2000
31-DEC- TO MACHINE 2000 31-DEC- BY PROFIT&LOSS 2000
1999 1999
TOTAL 2000 TOTAL 2000
31-DEC- BY MACHINE 2000 31-DEC- BY PROFIT&LOSS 2000
2000 2000
TOTAL 2000 TOTAL 2000

3.

REQUIREMENT #1 CALCULATION OF INTEREST&DEPRECIATION


INTEREST

BALANCE=CASH PRICE-DOWN PAYMENT

BALANCE=7500-1000=6500

YEAR 1998 1999 2000 2001 2002


BALANCE 6500 5000 3500 2000 500
INTEREST 325 250 175 100 25
5%
DEPRECIATION (REDUCING BALANCE METHOD

PURCHASED 5 MACHINES OF 1500 EACH

1500*5=7500

YEAR 1998 1999 2000 2001 2002


BALANCE 7500 6750 6075 5467 4920
DEPRECIATION 750 675 608 547 492
10%
REQUIRMENT#2

IN THE BOOKS OF SUN CO LTD

DR MACHINES ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN- TO STAR 7500 31-DEC- BY DEPRECIATION 750
1998 1998
31-DEC-
1998 BY BALANCE 6750
TOTAL 7500 TOTAL 7500
1-JAN- TO BALANCE 6750 31-DEC- BY DEPRECIATION 675
1999 1999
31-DEC-
1999 BY BALANCE 6075
TOTAL 6750 TOTAL 6750
1-JAN- TO BALANCE 6075 31-DEC- BY DEPRECIATION 608
2000 2000
31-DEC-
2000 BY BALANCE 5467

TOTAL 6075 TOTAL 6075


1-JAN- TO BALANCE 5467 31-DEC- BY DEPRECIATION 547
2001 2001
31-DEC-
2001 BY BALANCE 4920
TOTAL 5467 TOTAL 5467
1-JAN- TO BALANCE 4920 31-DEC- BY DEPRECIATION 492
2002 2001
31-DEC- BY BALANCE
2001 4428
TOTAL 4920 TOTAL 4920

IN THE BOOKS OF SUN CO LTD

DR STAR CO LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN- TO BANK 100O 1-JAN- BY MACHINE 7500
1998 1998
31-DEC- BY INTEREST 325
31-DEC- TO BANK 1825 1998
1998

31-DEC- TO BALANCE 5000


1998
TOTAL 7825 TOTAL 7825
31-DEC- TO BANK 1750 1-JAN- BY BALANCE 5000
1999 1999

31-DEC- 31-DEC-
1999 TO BALANCE 3500 1999 BY INTEREST 250
TOTAL 5250 TOTAL 5250
31-DEC- TO BANK 1675 1-JAN- BY BALANCE 3500
2000 2000

31-DEC- 31-DEC-
2000 TO BALANCE 2000 2000 BY INTEREST 175
TOTAL 3675 TOTAL 3675

31-DEC- TO BANK 1600 1-JAN- BY BALANCE 2000


2001 2001

31-DEC- TO BALANCE 500 31-DEC- BY INTEREST 100


2001 2001
TOTAL 2100 TOTAL 2100
31-DEC- TO BANK 525 1-JAN- BY BALANCE 500
2002 2002

31-DEC- BY INTEREST 25
2002
TOTAL 525 TOTAL 525

4.

REQUIREMENT: LEDGER ACCOUNTS IN THE BOOKS OF HINDUSTAN


MOTORS LTD (HIRE SELLER)

WORKING FOR INTEREST

INSTALLMENTS=12500*4=50000

(+) DOWN PAYMENT =5000

TOTAL 55000

(-) CASH PRICE (50000)


INTEREST 5000

RATIO OF INTEREST =5000/4+3+2+1 =5000/10

FOR 1997=5000*4/10=2000

FOR 1998=5000*3/10=1500

FOR 1999=5000*2/10=1000

FOR 2000=5000*1/10=500

IN THE BOOKS OF HINDUSTAN MOTORS LTD

DR J.COLLIERY COMPANY LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICUL AMOUNT


ARS
1-JAN- TO MOTORS 50000 1-JAN-1997 BY CASH 5000
1997 31-DEC-1997
31-DEC- 31-DEC-1997
1997 TO INTEREST 5000 BY CASH 12500

BY BALANCE 37500
TOTAL 55000 TOTAL 55000
1-JAN- TO BALANCE 37500 31-DEC-1998 BY CASH 12500
1998 31-DEC-1998

BY BALANCE 25000
TOTAL 37500 TOTAL 37500
1-JAN- TO BALANCE 25000 31-DEC-1999 BY CASH 12500
1999 31-DEC-1999
BY BALANCE 12500
TOTAL 25000 TOTAL 25000
1-JAN- TO BALANCE 12500 31-DEC-2000 BY CASH 12500
2000
TOTAL 12500 TOTAL 12500

DR INTEREST ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


31-DEC- TO PROFIT&LOSS 2000 1-JAN- BY J COLLIERY CO 5000
1997 1997
31-DEC-
1997 TO BALANCE 3000
TOTAL 5000 TOTAL 5000
31-DEC- TO PROFIT&LOSS 1500 1-JAN- BY BALANCE 3000
1998 1998
31-DEC-
1998 TO BALANCE 1500
TOTAL 3000 TOTAL 3000
31-DEC- TO PROFIT&LOSS 1000 1-JAN- BY BALANCE 1500
1999 1999
31-DEC- TO BALANCE 500
1999
TOTAL 1500 TOTAL 1500
31-DEC- TO PROFIT&LOSS 500 1-JAN- BY BALANCE 500
2000 2000
TOTAL 500 TOTAL 500

5.

REQUIREMENT: NECESSARY LEDGER ACCOUNTS IN BOMBAY MOTORS LTD


(HIRE SELLERS) BOOKS

WORKING:
CASH PRICE OF MOTOR CAR=37250

(-) DOWN PAYMENT = 10000

BALANCE = 27250

3 INSTALLMENTS 10000*3 = 30000

INTEREST = 2750

CALCULATION OF INTEREST
YEAR BALANCE RATE OF AMOUNT OF INSTALLMENTS TOTAL
INTEREST INTEREST PAYMENT
31- 27250 5% 1363 8637 10000
DEC-
1998
31- 18613 5% 931 9069 10000
DEC-
1999
31- 9543 5% 477 9543 10021
DEC-
2000
TOTAL 2771 27249 30021
RS.22 ADJUSTED IN LAST YEAR

IN THE BOOKS OF BOMBAY MOTORS LTD

DR MADRAS TRANSPORT COMPANY LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN- TO MOTOR CAR 37250 1-JAN-1998 BY CASH 10000
1998 31-DEC-
1-JAN- 1998
1998 TO INTEREST 2750 31-DEC- BY CASH 10000
1998

BY BALANCE 20000
TOTAL 40000 T0TAL 40000
1-JAN- TO BALANCE 20000 31-DEC- BY CASH 10000
1999 1999
31-DEC-
1999
BY BALANCE 10000
TOTAL 20000 TOTAL 20000
1-JAN- TO BALANCE 10000 31-DEC- BY CASH 10022
2000 2000
31-DEC-
2000 TO INTEREST 22
TOTAL 10022 TOTAL 10022

DR INTEREST ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


31- TO PROFIT&LOSS 1363 1-JAN- BY MADRAS 2750
DEC- 1998
1998

31- TO BALANCE 1387


DEC-
1998

TOTAL 2750 TOTAL 2750


31- TO PROFIT&LOSS 931 1-JAN- BY BALANCE 1387
DEC- 1999
1999
31-
DEC- TO BALANCE 456
1999
TOTAL 1387 TOTAL 1387
31- TO PROFIT&LOSS 455 1-JAN- BY BALANCE 456
DEC- 2000
2000 31-
DEC-
2000 BY MADRAS 22
TOTAL 477 TOTAL 477

6.

REQUIREMETS: SHOW ACCOUNTS IN BOOKS OF INDIAN PLASTIC LTD


(HIRE PURCHASER) FOR 3YEARS

WORKING

CASH PRICE OF VAN=12894

(-) DOWN PYMENT= (2000)

BALANCE 10894

3 INSTALLMENTS OF 4000 = 12000

INTEREST = 1106

CALCULATION OF INTEREST
YEAR BALANCE RATE OF INTEREST AMOUNT OF INSTALLMENTS TOTAL
INTEREST PAYMENT
31- 10894 5% 545 3455 4000
DEC-
1998
31- 7439 5% 372 3628 4000
DEC-
1999
31- 3811 5% 191 3811 4002
DEC-
2000
TOTAL 1108 10894 12002
INTEREST OF RS 2 IS ADJUSTED IN LAST INSTALLMENT

IN THE BOOKS OF INDIAN PLASTIC LTD

DR VANN ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN- TO HINDUSTAN AUTO 12894 31- BY DEPRECIATION 2579
1998 LTD DEC-
1998
31-
DEC- BY BALANCE 10315
1998
TOTAL 12894 TOTAL 12894
1-JAN- TO BALANCE 10315 31- BY DEPRECIATION 2063
1999 DEC-
1999
31-DEC BY BALANCE 8252
-1999
TOTAL 10315 TOTAL 10315
1-JAN- TO BALANCE 8252 31- BY DEPRECIATION 1650
2000 DEC-
2000
31- BY BALANCE 6602
DEC-
2000
TOTAL 8252 TOTAL 8252
DR HINDUSTAN AUTO LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN- TO BANK 2000 1-JAN- BY VAN 12894
1998 1998
31-DEC- TO BANK 4000 31-
1998 DEC- BY INTEREST 545
31-DEC- 1998
1998 TO BALANCE 7439
TOTAL 13439 TOTAL 13439
31-DEC- TO BANK 4000 1-JAN- BY BALANCE 7439
1999 1999
31-DEC- 31-
1999 TO BALANCE 3811 DEC- BY INTEREST 372
1999
TOTAL 7811 TOTAL 7811
31-DEC- TO BANK 4002 1-JAN- BY BALANCE 3811
2000 2000
31-
DEC- BY INTEREST 191
2000
TOTAL 4002 TOTAL 4002

7.

SHOW MACHINE A/C MACHINERY CO LTD A/C & INTEREST SUSPENSE A/C
IN THE BOOKS OF WELLMAN CO LTD (HIRE PURCHASER)

WORKING

CASH PRICE OF MACHINE= 33525

(-)DOWN PAYMENT = (9000)

BALANCE 24525

CALCULATION OF INTEREST

YEAR BALANCE RATE OF AMOUNT INSTALLMENTS TOTAL


INTEREST OF PAYMENT
INTEREST
31- 24525 5% 1226 7774 9000
DEC-
1998
31- 16751 5% 838 8162 9000
DEC-
1999
31- 8589 5% 411 8571 9000
DEC-
2000
TOTAL 2475 24507 27000
INSTALLMENT 9000*3 = 27000

(-)INSTALLMENT = (24507)

2493

(-) INTEREST (2475)

18 RS CHARGED TO SUSPENSE ACCOUNT

IN THE BOOKS OF WELLMAN CO LTD

DR MACHINERY CO LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN- TO CASH 9000 1-JAN- BY MACHINE 33525
1998 1998
31-DEC- TO CASH 9000 31-
1998 DEC- BY INTEREST 1226
31-DEC- TO BALANCE 16751 1998
1998
TOTAL 34751 TOTAL 34751
31-DEC- TO CASH 9000 1-JAN- BY BALANCE 16751
1999 1999
31-DEC- 31-
1999 TO BALANCE 8589 DEC- BY INTEREST 838
1999
TOTAL 17589 TOTAL 17589
31-DEC- TO CASH 9000 1-JAN- BY BALANCE 8589
2000 2000
31-
DEC- BY INTEREST 411
2000
TOTAL 9000 TOTAL 9000

DR MACHINE ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN- TO MACHINERY CO 33525 31-DEC- BY DEPRECIATION 3353
1998 LTD 1998
31-DEC-
1998
BY BALANCE 30172
TOTAL 33525 TOTAL 33525
1-JAN- TO BALANCE 30172 31-DEC- BY DEPRECIATION 3017
1999 1999
31-DEC-
1999
BY BALANCE 27155
TOTAL 30172 TOTAL 30172
1-JAN- TO BALANCE 27155 31-DEC- BY DEPRECIATION 2716
2000 2000
31-DEC-
2000
BY BALANCE 24439
TOTAL 27155 TOTAL 27155

DR INTEREST SUSPENSE ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICUARS AMOUNT


31-DEC- TO PROFIT&LOSS 18 31- BY INTEREST 18
2001 DEC-
2001
TOTAL 18 TOTAL 18

8.

REQUIREMENT: SHOW MACHINE A/C, VENDOR A/C, INTEREST SUSPENSE


A/C FOR FOUR YEARS IN BOOKS OF A (HIRE PURCHASER)

WORKING

CASH PRICE OF MACHINE=37000

(-) DOWN PAYMENT = (5000)

BALANCE 32000

CALCULATION OF INTEREST

YEAR BALANCE RATE AMOUNT INSTALLMENT TOTAL


OF PAYMENT
INTEREST
31-DEC-1998 32000 5% 1600 8000 9600
31-DEC-1999 24000 5% 1200 8000 9200
31-DEC-2000 16000 5% 800 8000 8800
31-DEC-2001 8000 5% 400 8000 8400
TOTAL 4000 32000 36000

IN THE BOOKS OF A

MACHINE ACCOUNT

DR CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1998 TO B 37000 31-DEC-1998 BY DEPRECIATION 3700
31-DEC-1998 BY BALANCE 33300
TOTAL 37000 TOTAL 37000
1-JAN-1999 TO BALANCE 33300 31-DEC-1999 BY DEPRECIATION 3330

31-DEC-1999 BY BALANCE 29970


TOTAL 33300 TOTAL 33300
1-JAN-2000 TO BALANCE 29970 31-DEC-2000 BY DEPRECIATION 2997

31-DEC-2000 BY BALANCE 26973


TOTAL 29970 TOTAL 29970
1-JAN-2001 TO BALANCE 26973 31-DEC-2001 BY DEPRECIATION 2697

31-DEC-2001 BY BALANCE 24276


TOTAL 26973 TOTAL 26973
DR B ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1998 TO BANK 5000 1-JAN-1998 BY MACHINE 37000
31-DEC-1998 TO BANK 9600 31-DEC-1998
31-DEC-1998 TO BALANCE 24000 BY INTEREST 1600
TOTAL 38600 TOTAL 38600
31-DEC-1999 TO BANK 9200 1-JAN-1999 BY BALANCE 24000
31-DEC-1999 TO BALANCE 16000 31-DEC-1999 BY INTEREST 1200
TOTAL 25200 TOTAL 25200
31-DEC-2000 TO BANK 8800 1-JAN-2000 BY BALANCE 16000
31-DEC-2000 TO BALANCE 8000 31-DEC-2000 BY INTEREST 800
TOTAL 16800 TOTAL 16800
31-DEC-2001 TO BANK 8400 1-JAN-2001 BY BALANCE 8000
31-DEC-2001 BY INTEREST 400
TOTAL 8400 TOTAL 8400

9.
REQUIREMENTS: MACHINERY A/C & MARSHALL A/ C IN THE BOOKS OF
ENGINEER (HIRE PURCHASER) FOR THREE YEARS

WORKING

CASH PRICE OF MACHINERY = 30000

(-) DOWN PAYMENT = (5000)

BALANCE 25000

CALCULATION OF INTEREST

YEAR BALANCE RATE AMOUNT INSTALLMENT TOTAL


PAYMENT
31-DEC-1999 25000 10% 2500 7500 10000
31-DEC-2000 17500 10% 1750 8250 10000
31-DEC-2001 9250 10% 925 9250 10175
TOTAL 5175 25000 30175

IN THE BOOKS OF ENGINEER

DR MACHINERY ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO MARSHALL 30000 31-DEC-1999 BY DEPRECIATION 6000
31-DEC-1999
BY BALANCE 24000
TOTAL 30000 TOTAL 30000
1-JAN-2000 TO BALANCE 24000 31-DEC-2000 BY DEPRECIATION 4800
31-DEC-2000
BY BALANCE 19200
TOTAL 24000 TOTAL 24000
1-JAN-2001 TO BALANCE 19200 31-DEC-2001 BY DEPRECIATION 3840
31-DEC-2001 BY BALANCE 15360
TOTAL 19200 TOTAL 19200
DR MARSHALL ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO CASH 5000 1-JAN-1999 BY MACHINERY 30000
31-DEC-1999 TO CASH 10000 31-DEC-1999 BY INTEREST 2500
31-DEC-1999 T0 BALANCE 17500

TOTAL 32500 TOTAL 32500


31-DEC-2000 TO CASH 10000 1-JAN-2000 BY BALANCE 17500
31-DEC-2000 TO BALANCE 9250 31-DEC-2000 BY INTEREST 1750
TOTAL 19250 TOTAL 19250
31-DEC-2001 TO CASH 10175 1-JAN-2001 BY BALANCE 9250
31-DEC-2001 BY INTEREST 925
TOTAL 10175 TOTAL 10175

10.

REQUIREMENT: SHOW NECESSARY LEDGER ACCOUNTS IN THE BOOKS OF


S.GUPTA (HIRE PURCHASER)

WORKING

CASH PRICE OF MACHINE=17000

(-) DOWN PAYMENT = (4000)

BALANCE 13000

6 HALF YEARLY INSTALLMENTS 2400*6 14400

INTEREST 1400

CALCULATION OF INTEREST
YEAR BALANCE RATE OF AMOUNT INSTALLMENT TOTAL
INTEREST OF PAYMENT
INTEREST
31-DEC-2000 13000 6% 390 2010 2400
30-JUNE-2001 10990 6% 330 2070 2400
31-DEC-2001 8920 6% 268 2132 2400
30-JUNE-2002 6788 6% 204 2196 2400
31-DEC-2002 4592 6% 138 2261 2400
30-JUNE-2003 2330 6% 70 2330 2400

IN THE BOOKS OF SRI S.GUPTA

DR MACHINE ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


30-JUNE-2000 TO B.C LTD 17000 31-DEC-2000 BY DEPRECIATION 1700
31-DEC- BY BALANCE
2000 15300
TOTAL 17000 TOTAL 17000
1-JAN-2001 TO BALANCE 15300 31-DEC-2001 BY DEPRECIATION 1530
31-DEC-2001 BY BALANCE 13770
TOTAL 15300 TOTAL 15300
1-JAN-2002 TO BALANCE 13770 31-DEC-2002 BY DEPRECIATION 1377
31-DEC-2002 BY BALANCE 12393
TOTAL 13770 TOTAL 13770
DR B.C LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT

30-JUNE-2000 TO CASH 4000 30-JUNE-2000 BY MACHINE 17000


31-DEC-2000 TO CASH 2400 31-DEC-2000 BY INTEREST 390
31-DEC-2000 TO BALANCE 10990
TOTAL 17390 TOTAL 17390
30-JUNE-2001 TO CASH 2400 1-JAN-2001 BY BALANCE 10990
30-JUNE-2001 TO BALANCE 8858 30-JUNE-2001 BY INTEREST 268
TOTAL 11258 TOTAL 11258
30-JUNE-2002 TO CASH 2400 1-JAN-2002 BY BALANCE 8858
30-JUNE-2002 TO BALANCE 6662 30-JUNE-2002 BY INTEREST 204

TOTAL 9062 TOTAL 9062


31-DEC-2002 TO CASH 2400 31-DEC-2002 BY BALANCE 6662
31-DEC-2003 TO BALANCE 4400 31-DEC-2002 BY INTEREST 138

TOTAL 6800 TOTAL 6800

30-JUNE-2003 TO CASH 2400 30-JUN-2003 BY BALANCE 4400


30-JUNE-2003 BY INTEREST 70

SECTION B: CASH PRICE IS NOT GIVEN

11.

REQUIREMENTS: CALCULATION OF CASH PRICE OF MACHINE, SHOW


MACHINERY ACCOUNT, IDEAL MACHINERIES LTD IN THE BOOKS OF MODEL
INDUSTRIES LTD (HIRE PURCHASER)

CALCULATION OF CASH PRICE

HIRE PURCHASE PRICE=COST PRICE+INTEREST

HIRE PURCHASE PRICE=30000+2563

HIRE PURCHASE PRICE=32563

RATIO OF INTEREST=RATE/COST+RATE OF INTEREST

RATIO OF INTEREST=5/100+5=5/105
YEAR AMOUNT DUE INTEREST CASH PRICE TOTAL
PAYMENT
31-DEC- 8400+18081=26481 26481*1/21=1261 8000 9261
1999
31-DEC- 8820+9261=18081 18081*1/21=861 8400 9261
2000
31-DEC- 9261 9261*1/21=441 8820 9261
2001
TOTAL 2563 25220 27783
CASH PRICE=25220

(+)DOWN PAYMENT=4780

TOTAL CASH PRICE= 30000

IN THE BOOKS OF MODEL INDUSTRIES LTD

DR MACHINERY ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO IDEAL 30000 31-DEC-1999 BY PROFIT&LOSS 3000
INDUSTRIES 31-DEC-1999
BY BALANCE 27000
TOTAL 30000 TOTAL 30000
1-JAN-2000 TO BALANCE 27000 31-DEC-2000 BY PROFIT&LOSS 2700
31-DEC-2000
BY BALANCE 24300
TOTAL 27000 TOTAL 27000
1-JAN-2001 TO BALANCE 24300 31-DEC-2001 BY PROFIT&LOSS 2430
31-DEC-2001
BY BALANCE 21870
TOTAL 24300 TOTAL 24300

DR IDEAL MACHENERIES LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO DOWN 4780 1-JAN-1999 BY MACHINERY 30000
PAYMENT 31-DEC-1999 BY INTEREST 1261
31-DEC- TO INSTALLMENT 9261
1999
31-DEC- TO BALANCE 17220
1999

TOTAL 31261 TOTAL 31261


31-DEC- TO INSTALLMENT 9261 1-JAN-2000 BY BALANCE 17220
2000 31-DEC-2000 BY INTEREST 861
31-DEC- TO BALANCE 8820
2000

TOTAL 18081 TOTAL 18081


31-DEC- TO INSTALLMENT 9261 1-JAN-2001 BY BALANCE 8820
2001 31-DEC-2001 BY INTEREST 441
TOTAL 9261 TOTAL 9261

12.

REQUIREMENTS: CALCULATION OF CASH PRICE, VENDOR


ACCOUNT&INTEREST PAID ACCOUNT

CALCULATION OF CASH PRICE

RATIO OF INTEREST=RATE/COST+RATE OF INTEREST

RATIO OF INTEREST=10/100+10

RATIO OF INTEREST=1/11

YEARS AMOUNT DUE INTEREST CASH TOTAL


PRICE PAYMENT
1 2630+13425=16055 16055*1/11=1460 2390 3850
2 2893+10532=13425 13425*1/11=1220 2630 3850
3 3182+7350=10532 10532*1/11=957 2893 3850
4 3500+3850=7350 7350*1/11=668 3182 3850
5 3850 3850*1/11=350 3500 3850
TOTAL 4655 14595 19250
CASH PRICE=14595

(+)DOWN PAYMENT=5600

TOTAL CASH PRICE= 20195

IN THE BOOKS OF PURCHASER

DR VENDOR ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1998 TO DOWN 5600 1-JAN-1998 BY MACHINE 20195
PAYMENT
31-DEC- TO INSTALLMENT 3850 31-DEC- BY INTEREST 1460
1998 1998
31-DEC- TO BALANCE 12205
1998
TOTAL 21655 TOTAL 21655
31-DEC- TO INSTALLMENT 3850 1-JAN-1999 BY BALANCE 12205
1999
31-DEC- TO BALANCE 9575 31-DEC- BY INTEREST 1220
1999 1999
TOTAL 13425 TOTAL 13425
31-DEC- TO INSTALLMENT 3850 1-JAN-2000 BY BALANCE 9575
2000
31-DEC- TO BALANCE 6682 31-DEC- BY INTEREST 957
2000 2000
TOTAL 10532 TOTAL 10532
31-DEC- TO INSTALLMENT 3850 1-JAN-2001 BY BALANCE 6682
2001
31-DEC- TO BALANCE 3500 31-DEC- BY INTEREST 668
2001 2001
TOTAL 7350 TOTAL 7350
31-DEC- TO INSTALLMENT 3850 1-JAN-2002 BY BALANCE 3500
2002
31-DEC- BY INTEREST 350
2002
TOTAL 3850 TOTAL 3850
DR INTEREST PAID ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


31-DEC- TO VENDOR 1460 31-DEC- BY PROFIT&LOSS 1460
1998 1998
TOTAL 1460 TOTAL 1460
31-DEC- TO VENDOR 1220 31-DEC- BY PROFIT&LOSS 1220
1999 1999
TOTAL 1220 TOTAL 1220
31-DEC- TO VENDOR 957 31-DEC- BY PROFIT&LOSS 957
2000 2000
TOTAL 957 TOTAL 957
31-DEC- TO VENDOR 668 31-DEC- BY PROFIT&LOSS 668
2001 2001
TOTAL 668 TOTAL 668
31-DEC- TO VENDOR 350 31-DEC- BY PROFIT&LOSS 350
2002 2002
TOTAL 350 TOTAL 350

13.

WORKING

CAKCULATION OF CASH PRICE

BALANCE=20000

EQUAL 4.33 x AFTER 5 YEARS

20000*4.33+20000

86600+20000=106600
CASH PRICE=106600

14.

REQUIREMENTS: AUTO SERVICE MADRAS A/C, TAXI A/C, INTEREST A/C

WORKING:

RATIO OF INTEREST: 1/11

CALCULATIONS

YEAR AMOUNT INTEREST CASH PRICE TOTAL


PAYMENT
31-DEC-1999 16500+38115=54615 54615*1/11=4965 15000 19965
31-DEC-2000 18150+19965=38115 38115*1/11=3465 16500 19965
31-DEC-2001 19965 19965*1/11=1815 18150 19965
TOTAL 10245 49650
CASH PRICE=49650

(+)DOWN PAYMENT=10350

TOTAL CASH PRICE =6000

IN THE BOOKS OF MADRAS TAXI SERVICE

DR TAXI ACCOUNT CR
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-JAN-1999 TO AUTO SERVICE 60000 31-DEC- BY PROFIT&LOSS 12000
1999
31-DEC- BY BALANCE 48000
1999
TOTAL 60000 TOTAL 60000
1-JAN-2000 TO BALANCE 48000 31-DEC- BY PROFIT&LOSS 9600
2000
31-DEC- BY BALANCE 38400
2000
TOTAL 48000 TOTAL 48000
1-JAN-2001 BY BALANCE 38400 31-DEC- BY PROFIT&LOSS 7680
2001
31-DEC- BY BALANCE 30720
2001
TOTAL 38400 TOTAL 38400
DR AUTO SERVICE MADRAS ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO DOWN 10350 1-JAN-1999 BY MACHINE 60000
PAYMENT
31-DEC- TO INSTALLMENT 19965 31-DEC- BY INTEREST 4965
1999 1999
31-DEC- TO BALANCE 34650
1999
TOTAL 64965 TOTAL 64965
31-DEC- TO INSTALLMENT 19965 1-JAN-2000 BY BALANCE 34650
2000
31-DEC- TO BALANCE 18150 31-DEC- BY INTEREST 3465
2000 2000
TOTAL 38115 TOTAL 38115
31-DEC- TO INSTALLMENT 19965 1-JAN-2001 BY BALANCE 18150
2001 31-DEC- BY INTEREST 1815
2001
TOTAL 19965 TOTAL 19965
DR INTEREST ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


31-DEC- TO AUTO SERVICE 4965 31-DEC- BY PROFIT&LOSS 4965
1999 MADRAS 1999
TOTAL 4965 TOTAL 4965
31-DEC- TO AUTO SERVICE 3465 31-DEC- BY PROFIT&LOSS 3465
2000 MADRAS 2000
TOTAL 3465 TOTAL 3465
31-DEC- TO AUTO SERVICE 1815 31-DEC- BY PROFIT&LOSS 1815
2001 MADRAS 2001
TOTAL 1815 TOTAL 1815

15.

REQUIREMENT: MACHINERY A/C &Y LTD A/C IN THE BOOKS OF X

RATIO OF INTEREST=1/11

CALCULATION OF INTEREST

YEAR AMOUNT INTEREST CASH PRICE TOTAL


PAYMENT
31-DEC-1999 8264+30091=38355 38355*1/11=3487 7513 11000
31-DEC-2000 9091+21000=30091 30091*1/11=2736 8264 11000
31-DEC-2001 10000+11000=21000 21000*1/11=1909 9091 11000
31-DEC-2002 11000 11000*1/11=1000 10000 11000
CASH PRICE=34868

(+)DOWN PAYMENT=20000

TOTAL CASH PRICE=54868

IN THE BOOKS OF X LTD


MACHINERY ACCOUNT

DR CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO Y LTD 54868 31-DEC- BY PROFIT&LOSS 5487
1999
31-DEC- BY BALANCE 49381
1999
TOTAL 54868 TOTAL 54868
1-JAN-2000 TO BALANCE 49381 31-DEC- BY PROFIT&LOSS 4938
2000
31-DEC- BY BALANCE 44443
2000
TOTAL 49381 TOTAL 49381
1-JAN-2001 TO BALANCE 44443 31-DEC- BY PROFIT&LOSS 4444
2001
31-DEC- BY BALANCE 39999
2001
TOTAL 44443 TOTAL 44443
1-JAN-2002 TO BALANCE 39999 31-DEC- BY PROFIT&LOSS 4000
2002
31-DEC- BY BALANCE 35999
2002
TOTAL 39999 TOTAL 39999
DR Y ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1999 TO DOWN 20000 1-JAN-1999 BY MACHINERY 54868
PAYMENT 31-DEC- BY INTEREST 3487
31-DEC- TO INSTALLMENT 11000 1999
1999
31-DEC- TO BALANCE 27355
1999
TOTAL 58355 TOTAL 58355
31-DEC- TO INSTALLMENT 11000 1-JAN- BY BALANCE 27355
2000 2OOO
TO BALANCE 19091 31-DEC- BY INTEREST 2736
31-DEC- 2000
2000
TOTAL 30091 TOTAL 30091
31-DEC- TO INSTALLMENT 11000 1-JAN-2001 BY BALANCE 19091
2001
31-DEC- TO BALANCE 10000 31-DEC- BY INTEREST 1909
2001 2001
TOTAL 21000 TOTAL 21000
31-DEC- TO INSTALLMENT 11000 1-JAN-2002 BY BALANCE 10000
2002
31-DEC- BY INTEREST 1000
2002
TOTAL 11000 TOTAL 11000

SECTION C: REPOSSESSION OF GOODS

16.

IN THE BOOKS OF TRANSPORT LTD

GENRAL JOURNAL

DATE PARTICULARS DR CR
1-JAN- BUSES A/C 225000
1998 TO ARVIND MOTORS A/C 225000
(BEING PURCHASE OF 3 BUSES FROM ARVIND OF 75000 EACH)
1-JAN- ARVIND MOTORS A/C 135000
1998 TO CASH A/C 135000
(BEING PAYMENT MADE ON SIGNING CONTRACT)
31-DEC- INTEREST A/C 10800
1998 TO ARVIND MOTORS A/C 10800
(BEING INTEREST PAYABLE TO ARVIND)
31-DEC- ARVIND MOTORS A/C 40800
1998 TO CASH A/C 40800
(BEING 1ST INSTALLMENT PAID WITH INTEREST)
31-DEC- INTEREST A/C 7200
1999 TO ARVIND A/C 7200
31-DEC- ARVIND MOTORS A/C 60000
1999 TO BUSES A/C 60000
(BEING 2 BUSES REPOSSESSED BY ARVIND)
31-DEC- PROFIT&LOSS A/C 36000
1999 TO BUSES A/C 36000
(LOSS ON REPOSSESSION OF BUSES)

WORKING

CASH PRICE OF 3 BUSES=225000

(-)DOWM PAYMENT = (135000)

90000%3=30000 EACH INSTALLMENT

INTEREST=12%

INTEREST ON 1ST INSTALLMENT= 90000*12%=10800

INTEREST ON 2ND INSTALLMENT=60000*12%=7200

VALUE OF BUSES

IN THE BOOKS OF SELLER IN THE BOOKS OF PURCHASE

VALUE=75000*2=150000 COST OF ASSET=15000

1ST DEP: 150000*30%=45000 IST DEP: 150000*20%=30000

2ND DEP: 150000*30%=45000 2ND DEP: 120000*20%=24000

TOTAL DEPRECIATION= 90000 TOTAL DEPRECIATION=54000

BOOK VALUE=150000-90000=60000 BOOK VALUE=150000-54000=96000

VALUE OF BUSES
IN PURCHASER BOOKS=96000

IN SELLERS BOOKS =60000

PURCHASER LOSS 36000

IN THE BOOKS OF TRANSPORT LTD

DR ARVIND MOTORS ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JAN-1998 TO CASH 135000 1-JAN-1998 BY BUSES 225000

31-DEC- TO CASH 40800 31-DEC- BY INTEREST 10800


1998 1998
31-DEC- TO BALANCE 60000
1998
TOTAL 235800 TOTAL 235800
31-DEC- TO BUSES 60000 1-JAN-1999 BY BALANCE 60000
1999
31-DEC- TO BALANCE 7200 31-DEC- BY INTEREST 7200
1999 1999
TOTAL 67200 TOTAL 67200

17.

REQUIREMENT: SHOW ENTRIES IN THE BOOKS OF BOTH PARTIES

IN THE BOOKS OF X&Y CO LTD

GENERAL JOURNAL

DATE PARTICULARS DR CR
1-APRIL- MACHINE A/C 200000
2000 TO Z.CO LTD 200000
(BEING 9 MACHINES HIRE PURCHASED FROM Z)
1-APRIL- Z.CO LTD 50000
2000 TO CASH 50000
(BEING PAYMENT MADE ON SIGNING CONTRACT)
31-DEC- INTEREST A/C 15000
2000 TO Z0.CO LTD A/C 15000
(BEING INTEREST PAYABLE TO Z)
31-DEC- Z.CO LTD A/C 65000
2000 TO CASH A/C 65000
(BEING IST INSTALLMENT PAID TO Z)
31-DEC- DEPRECIATION A/C 40000
2000 TO MACHINERY A/C 40000
(BEING DEPRECIATION CHARGED ON MACHINES)
31-DEC- PROFIT&LOSS A/C 55000
2000 TO DEPRECIATION 55000
TO INTEREST
(BEING DEP&INTEREST CHARGED TO P&L)
31-DEC- INTEREST A/C 10000
2001 TO Z.CO LTD 10000
(BEING INTEREST PAYABLE Z)
31-DEC- DEPRECIATION A/C 32000
2001 TO MACHINERY 32000
(BEING DEPRECIATION CHARGED ON MACHINERY ON
DIMISHING BALANCE METHOD)
31-DEC- Z.CO LTD 49000
2001 TO MACHINERY A/C 49000
(BEING 2 MACHINES REPOSSESSED BY Z.CO LTD)
31-DEC- PROFIT&LOSS A/C 64000
2000 TO MACHINES 64000
(BEING LOSS ON MACHINES REPOSSESSED CHARGED TO P&L)

WORKING

CASH PRICE OF MACHINES=200000

(-)DOWN PAYMENT = (50000)

3 INSTALLMENTS 150000%3=5000 EACH INSTALLMENT


INTEREST ON 1ST INSTALLMENT=150000*10%=15000

INTEREST ON 2ND INSTALLMENT=100000*10%=10000

VALUE OF MACHINES IN X&Y CO LTD BOOKS (HIRE PURCHASER)

VALUE OF ASSETS=200000

1ST DEP=200000*20%=40000

2ND DEP=160000*20%=32000

TOTAL DEPRECIATION=72000

BOOK VALUE=200000-72000=128000

128000/4*2=64000

BOOK VALUE=64000

IN THE BOOKS OF X&Y

DR Z.CO LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-APRIL- TO CASH 50000 1-APRIL- BY MACHINES 200000
2000 2000
31-DEC- TO CASH 65000 31-DEC- BY INTEREST 15000
2000 2000
31-DEC- TO BALANCE 100000
2000
TOTAL 215000 TOTAL 215000
31-DEC- TO MACHINE 49000 1-APRIL- BY BALANCE 100000
2001 2001
31-DEC- TO BALANCE 61000 31-DEC- BY INTEREST 10000
2001 2001
TOTAL 110000 TOTAL 110000
DR MACHINERY ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-APRIL- TO Z.CO LTD 200000 31-DEC- BY DEPRECIATION 40000
2000 2000
31-DEC- BY BALANCE 160000
2000
TOTAL 200000 TOTAL 200000
1-JAN- TO BALANCE 160000 31-DEC- BY DEPRECIATION 32000
2001 2001
31-DEC- BY Z.CO LTD 64000
2001
31-DEC- BY BALANCE 64000
2001

TOTAL 160000 TOTAL 160000

IN THE BOOKS OF Z.CO LTD

GENERAL JOURNAL

DATE PARTICULARS DR CR
1-APRIL- X&Y A/C 200000
2000 TO MACHINERY A/C 200000
(BEING HIRE SALE OF MACHINERY TO X&Y)
1-APRIL- CASH A/C 50000
2000 TO X&Y 50000
(BEING PAYMENT ON SIGNING CONTRACT)
31-DEC- X&Y A/C 15000
2000 TO INTEREST 15000
(BEING INTEREST RECEIVABLE BY X&Y)
31-DEC- CASH A/C 65000
2000 TO X&Y A/C 65000
(BEING 1ST INSTALLMENT RECEIVED FROM X&Y)
31-DEC- INTEREST A/C 15000
2000 TO PROFIT&LOSS A/C 15000
(BEING INTEREST TRANSFERRED TO PROFIT&LOSS)
31-DEC- X&Y A/C 10000
2001 TO INTEREST A/C 10000
(BEING INTEREST RACEIVABLE BY X&Y)
31-DEC- REPOSSESSEION A/C 49000
2001 TO X&Y A/C 49000
(BEING GOODS REPOSSESSED FROM X&Y)
31-DEC- REPOSSESSION A/C 10000
2001 TO CASH 10000
(BEING EXPENSES PAID ON REPAIRING ASSET)
31-DEC- CASH A/C 120000
2001 TO REPOSSESSION A/C 120000
(BEING CASH RECEIVED ON RESALE OF ASSET)
31-DEC- REPOSSESSION A/C 61000
2001 TO PROFIT&LOSS A/C 61000
(BEING PROFIT ON SALE OF REPOSSESSED ASSET)
WORKING

VALUE OF 2 MACHINES=100000

1ST DEP=100000*30%=30000

2ND DEP=70000*30%=21000

TOTAL DEPRECIATION=51000

BOOK VALUE=100000-51000=49000

PROFIT&LOSS

PURCHASER BOOK VALUE=64000

(-)SELLER BOOK VALUE = (49000)

LOSS OF PURCHASER =15000


IN THE BOOKS OF Z.CO LTD

DR X&Y LTD ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-APRIL- TO MACHINES 200000 1-APRIL- BY CASH 50000
2000 2000
31-DEC- TO INTEREST 15000 31-DEC- BY CASH 65000
2000 2000
31-DEC- BY BALANCE 100000
2000
TOTAL 215000 TOTAL 215000
1-JAN-2001 TO BALANCE 100000 31-DEC- BY REPOSSESSIO 49000
2001
31-DEC- TO INTEREST 10000
2001 31-DEC- BY BALANCE 61000
2001
TOTAL 110000 TOTAL 110000
DR REPOSSESSION ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


31-DEC- TO X&Y 49000 31-DEC- BY CASH 120000
2001 2001
31-DEC- TO CASH 10000
2001
31-DEC- TO BALANCE 61000
2001
TOTAL 120000 TOTAL 120000

18.
REQUIREMENT: SHOW RELEVANT ACCOUNTS IN THE BOOKS OF X
(HIRE PURCHASER)

IN THE BOOKS OF X

GENERAL JOURNAL

DATE PARTICULARS DR CR
1-JULY- TRUCKS A/C 350000
2001 TO Y A/C 350000
(BEING HIRE PURCHASE OF 7 TRUCKS OF 50000 EACH)
1-JULY- Y A/C 70000
2001 TO CASH A/C 70000
(BEING PAYMENT ON SIGNING CONTRACT TO Y)
31-DEC- INTEREST A/C 7000
2001 TO Y A/C 7000
(BEING HALF YEARLY INTEREST PAYABLE TO Y)
31-DEC- Y A/C 63000
2001 TO CASH A/C 63000
(BEING 1ST INSTALLMENT 56000+INTEREST 7000 PAID TO Y)
31-DEC- DEPRECIATION A/C 35000
2001 TO TRUCKS A/C 35000
(BEING HALF YEAR DEPRECIATION CHARGED ON TRUCKS)
30-JUNE- INTEREST A/C 5600
2002 TO Y A/C 5600
(BEING HALF YEAR INTEREST PAYABLE TO Y)
30-JUNE- DEPRECIATION A/C 35000
2002 TO TRUCK A/C 35000
(BEING DEPRECIATION CHARGED ON TRUCKS FOR HALF
YEAR)
30-JUNE- Y A/C 112500
2002 TO TRUCKS A/C 112500
(BEING 3 TRUCKS REPOSSESSED BY Y)
30-JUNE- PROFIT&LOSS A/C 7500
2002 TO TRUCKS 7500
(BEING LOSS ON REPOSSESSION OF TRUCKS CHARGED TO
P&L)
WORKING

CASH PRICE OF TRUCKS=350000

(-) DOWN PAYMENT = (70000)

280000

FIVE INSTALLMENTS / 5

HALF YEAR INSTALLMENTS=56000

INTEREST ON 1ST INSTALLMENT=280000*5/100*6/12=7000

INTEREST ON 2ND INSTALLMENT=224000*5/100*6/12=5600

VALUE OF TRUCKS

IN PURCHASER BOOKS

3 TRUCKS 50000*3=150000
DEPRECIATION=150000*20%=300

BOOK VALUE=150000-30000=120000

IN SELLERS BOOK

50000*3=150000

DEP=150000*25%=37500

BOOK VALUE =150000-37500=112500

VALUE OF TRUCKS

IN PURCHASER BOOK=120000

IN SELLER BOOK =112500


LOSS OF PURCHASER=7500

IN THE BOOKS OF X

DR TRUCKS ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JULY-2001 TO Y 350000 31-DEC- BY DEPRECIATION 35000
2001
31-DEC- BY BALANCE 315000
2001
TOTAL 350000 TOTAL 350000
1-JAN-2002 TO BALANCE 315000 30-JUNE- BY DEPRECIATION 35000
2002
30-JUNE- BY Y 112500
2002
30-JUNE- BY PROFIT&LOSS 7500
2002
30-JUN- BY BALANCE 160000
2001
TOTAL 315000 TOTAL 315000
DR VENDORS ACCOUNT CR

DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT


1-JULY-2001 TO CASH 70000 1-JULY-2001 BY TRUCK 350000
31-DEC-2001 31-DEC-2001
31-DEC-2001 TO CASH 63000 BY INTEREST 7000

TO BALANCE 224000
TOTAL 357000 TOTAL 357000
31-DEC-2002 TO TRUCKS 112500 1-JAN-2002 BY BALANCE 224000

31-DEC-2002 TO BALANCE 117100 31-DEC-2002 BY INTEREST 5600


TOTAL 229600 TOTAL 229600
THE END