ACCOUNTING UNIT-1 SPECIAL ACCOUNTING TRANSACTIONS AND SYSTEMS - I compiled by CA.

Ramesh Bhandari 9878812453, (0172) 5193314, 2270053

Topic 6 Hire Purchase and Instalment Payment systems

Answers
Q1. Situation no.2 for interest computation. Interests (Nil, 2725, 1861.25, 913.75) Q2.Situation no. 3 for interest computation Method 1 Interest (Nil, 400, 200, 100) Method 2 Interest (Nil, 420, 210, 70) Q3. Situation no. 4 (WORKBACK Method) TOTAL CASH PRICE Rs. 54868.52 Total interest Rs. 9131.48 Q4. Situation no. 3 for interest computation Method 1 Interest (24000, 18000, 12000, 6000) Method 2 Interest (26250, 18750, 11250, 3750) Q5. Total cash price Rs. 150000; total interest Rs. 50000; H.P Price Rs. 200000 Q6. Situation no. 4 (WORKBACK Method) TOTAL CASH PRICE Rs. 25976.87 Total interest Rs. 4023.13 Q7. Interest (2236, 155.6, 844.4) Assumed depreciation till date of repossession but interest till date of default Loss on repossession Rs. 7822.64 Balance in Hire vendor Rs. 17155.6 transferred to asset account Q8.Total cash price 300000. Interest (Nil, 33750, 22500, 11250) Value of goods repossessed Rs. 43200 Book value of asset not repossessed Rs. 42187.50 Loss on repossession Rs. 41175 Balance of Hire vendor account Rs. 43050 Q9. Purchaser books Loss on repossession Rs. 5113.75 Vendor Books Profit on sale of repossessed goods 1957.50
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ACCOUNTING UNIT-1 SPECIAL ACCOUNTING TRANSACTIONS AND SYSTEMS - I compiled by CA. Ramesh Bhandari 9878812453, (0172) 5193314, 2270053

Q10. Total cash price 100000. Interest (Nil, 750, 5250, 2250) Value of goods repossessed Rs. 20580 Book value of asset not repossessed Rs. 20480 Loss on repossession Rs. 10140 Balance of Hire vendor account Rs. 9420 Q11. 1433.33 profit

Q12. 103000 Q13. 86000 Q14. 2666.67 profit Q15. 50900 Q16. (IN ALL DETAILS TO BE DONE IN CLASS)

Q17. Rs. 31166.67

Q18. 23250
Q19. Statement showing cash value of the machine acquired on hire-purchase basis Instalment Amount Interest @ 5% half yearly (10% p.a.) = 5/105 = 1/21) (in each instalment) Rs. 5th Instalment Less: Interest Add: 4th Instalment Less: Interest Add: 3rd instalment 6,000 286 5,714 6,000 11,714 558 11,156 6,000 558 5,442 (11,1565,714) Rs. 286 Rs. 5,714 Principal Amount (in each instalment)

ACCOUNTING UNIT-1 SPECIAL ACCOUNTING TRANSACTIONS AND SYSTEMS - I compiled by CA. Ramesh Bhandari 9878812453, (0172) 5193314, 2270053 17,156 817 5,183

Less: Interest Add: 2nd instalment Less: Interest Add: 1st instalment Less: Interest

817 16,339 6,000 22,339 1,063 21,276 6,000 27,276 1,299 25,977 4,023 1,299 1,063

(16,33911,156)

4,937 (21,27616,339)

4,701 (25,97721,276) 25,977

The cash purchase price of machinery is Rs. 25,977.

Q20. Balance Sheet of Gopinath & Co. as at 31st December, 2006 Liabilities Rs. Assets Rs. FM & Co. Ltd. 40,000 Pick-up Van 90,000 Balance Sheet of Gopinath & Co. as at 31st December, 2007 Liabilities Rs. Assets Rs. FM & Co. Ltd. 20,000 Pick-up Van 80,000 Balance Sheet of Gopinath & Co. as at 31st December, 2008 Liabilities Rs. Assets Rs. FM & Co. Ltd. 20,000 Pick-up Van 70,000 Q21. If interest is ignored then Rs.450; otherwise Rs (1000*144/210) i.e. 685 Q22. Cash Price Rs. 300000 Depreciation Year 1- 90000, year 2 -63000, Year 3 44100 Q23.Rs. 150004 (Misprint of date even in module in question.year of purchase to be same as date of start of instalments) Q24.Year 1 - 861, Year 2 - 369 Q25. 8600

ACCOUNTING UNIT-1 SPECIAL ACCOUNTING TRANSACTIONS AND SYSTEMS - I compiled by CA. Ramesh Bhandari 9878812453, (0172) 5193314, 2270053

Q26. Year 1 - 126, Year 2- 78, Year 3 - 30 Q27. Rs. 550000 Q28. Rs. 200000 Cash price Q29. Cash Price Rs. 15533 (WORKBACK Method)Loss on repossession Rs. 624 Q30. . Total cash price 225000 Interest (Nil, 16200, 10800, nil) Value of goods repossessed Rs. 73500 Book value of asset not repossessed Rs. 48000 Loss on repossession Rs. 22500 Balance of Hire vendor account Rs. 57300 (Settled by payment)

Q31. Total cash price 150000. Interest (Nil, 10800, 7200, 3438) Value of goods repossessed Rs. 49000 Book value of asset not repossessed Rs. 32000 Loss on repossession Rs. 15000 Balance of Hire vendor account Rs. 41638 (Settled by payment) Q32. (a) Tractors on hire purchase closing balance Rs. 14000 (b) Provision for depreciation of tractors closing balance Rs. 3050 (c) Disposal of tractors. Loss on sale Rs. 1150 (d) Hire purchase company closing balance Rs. 1500 resulting in Rs. 200 profit on settlement of one tractor.
Q33. Books of ABC Associates Flexible Leasing Limited Account Dr. Rs. 1996 March 25 March 31 To Lease rental A/c To Bank 72,000 53,400 1996 March 25 March 25 By Car on Hire Purchase A/c By Interest 2,00,000 1,60,000 Cr. Rs.

ACCOUNTING UNIT-1 SPECIAL ACCOUNTING TRANSACTIONS AND SYSTEMS - I compiled by CA. Ramesh Bhandari 9878812453, (0172) 5193314, 2270053 Suspense A/c

March 31

To Balance c/d

2,40,000 3,65,400

By Interest A/c

5,400 3,65,400

Interest Suspense Account Dr. Rs. 1996 March 25 To Flexible Leasing Ltd. A/c 1,60,000 1996 March, 31 March, 31 1,60,000 Working Notes : (i) Calculation of balance payable on 31 st March, 1996 and the Amount of Interest Calculation of Difference Payable on 31.3.1996 and Interest
Date Quarterly Hire Charges (Rs.) 30,000 30,000 30,000 30,000 Quarterly Lease Rentals Paid (Rs.) 18,000 18,000 18,000 18,000 72,000 Difference Payable (Rs.) 12,000 12,000 12,000 12,000 48,000 Interest From 1.4.95 1.7.95 1.10.95 1.1.96 (18% p.a.) To 31.3.96 31.3.96 31.3.96 31.3.96 Amount of Interest (Rs.) 2,160 1,620 1,080 540 5,400

Cr. Rs. By Interest on Hire purchase A/c By Balance c/d 72,727 87,273 1,60,000

1.4.95 1.7.95 1.10.95 1.1.96

Amount payable on 31st March, 1996 : Rs. Balance due Interest due 48,000 5,400 53,400 (1) Ascertainment of Total Amount of Interest on Hire Purchase Rs. Hire Purchase Price of the car (Rs. 30,000 12 installments) Less : Cash Price Total Amount of Interest Date 1.4.95 3,60,000 2,00,000 1,60,000 Interest Calculation Interest Rs.

(2) Calculation of Interest on Hire Purchase Attributable to the year 1995-1996.

ACCOUNTING UNIT-1 SPECIAL ACCOUNTING TRANSACTIONS AND SYSTEMS - I compiled by CA. Ramesh Bhandari 9878812453, (0172) 5193314, 2270053 1.7.95 26,667 11 1,60,000 66

1.10.95 1.1.96

1,60,000 1,60,000

10 66 9 66

24,242 21,818 72,727

Q34. Profit 201042 Q35 Rs. 7300 Q36. 165600 (Value of repossessed stock 21600) Q37. Rs. 426000 Q38. 97028.57+ 3000 on repossessed items Q39. Rs. 61500 Q40. 34125 Q41. 352000 Q42. Rs. 1400 profit Q43. Rs. 1800000 profit Q44. HP 225000; Trading 234000; Repossessed goods 1000; Profits before tax 300000; Profits after tax 195000 Q45. Rs. 499000
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ACCOUNTING UNIT-1 SPECIAL ACCOUNTING TRANSACTIONS AND SYSTEMS - I compiled by CA. Ramesh Bhandari 9878812453, (0172) 5193314, 2270053

Q46. 43300 Q47. Rs. 897500 Q48.210000 profit Q49. Hire purchase profit 798000; Gross profit (Trading) 140000; Net profit 5,42,000