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    Hire Purchase 2

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    Aaryan Sen
    The document contains sample questions related to accounting for hire purchase transactions. It includes questions about partial repossession, calculating interest amounts, and determining cash price when installments or interest rates are given.

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    Hire Purchase 2

    Uploaded by

    Aaryan Sen
    4 views2 pages
    The document contains sample questions related to accounting for hire purchase transactions. It includes questions about partial repossession, calculating interest amounts, and determining cash price when installments or interest rates are given.

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    © © All Rights Reserved

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    PDF, TXT or read online from Scribd

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    The document contains sample questions related to accounting for hire purchase transactions. It includes questions about partial repossession, calculating interest amounts, and determining cash price when installments or interest rates are given.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    4 views2 pages

    Hire Purchase 2

    Uploaded by

    Aaryan Sen
    The document contains sample questions related to accounting for hire purchase transactions. It includes questions about partial repossession, calculating interest amounts, and determining cash price when installments or interest rates are given.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 2

    Group 1-Accounts

    Topic: Hire Purchase System


    Lecture 2
    Question1: (Partial Repossession):

    On 01/01/2018, Taj Hotel bought 5 television sets from Supreme Television Ltd. on hire
    purchase system. Cash price of each television was ₹20,000. It was agreed that ₹25,000 should
    be paid as down payment and the balance in 3 equal instalments of ₹30,000 each at the end of
    the year. Supreme Ltd. charges interest @ 10% p.a. Taj Hotel depreciated the T.V. sets @
    20%p.a. on WDV basis. It paid down payment and two instalments and fails to pay the last
    instalment. As per the agreement, the vendor repossessed 3 T.V. sets, leaving 2 with the buyer
    and adjusting the value of 3 sets against the amount due. The T.V. sets were valued on the
    basis of 30% depreciation p.a. on WDV basis by Supreme Television Ltd. The repossessed
    sets were sold by the vendor for ₹30,000 after necessary repairs of ₹5,000. Prepare necessary
    accounts.

    Question 2:

    X Ltd. purchased 3 buses from Arvind Motors costing ₹75,000 each on hire purchase system.
    Payment was to be made for each bus ₹45,000 down and remainder in 3 equal instalments
    together with the interest of 12%p.a. X Ltd. writes off depreciation @20% on WDV basis. It
    paid 1st instalment but could not pay the next. Arvind Motors agreed to leave one bus with
    purchaser adjusting the value of other 2 buses against the amount due. The buses were valued
    on the basis of 30% depreciation on SLM basis by Arvind Motors. Arvind Motors spent ₹8,400
    on its repairs and sold it for ₹65,000. Prepare necessary accounts.

    Case 3: When rate of interest is not given.

    Question1:

    Happy Valley Florists Ltd. acquired a delivery van on hire purchase on 01-04-20X1 from
    Ganesh Enterprises. The terms were as follows:

    Particulars Amount (₹)


    Hire Purchase Price 1,80,000
    Down Payment 30,000
    1st Instalment payable after 1 year 50,000
    2nd Instalment after 2 years 50,000
    3rd Instalment after 3 years 30,000
    4th Instalment after 4 years 20,000
    Cash price of van ₹150,000. You are required to calculate Total Interest and Interest included
    in each instalment.

    Question 2:

    On 01/01/2015, XYZ and Co. took delivery from ABC Ltd. on a machine on hire purchase
    system. ₹1500 being paid on delivery and balance in 5 instalments of ₹3,000 each payable
    annually on 31/12 each year. Cash price of the machine is ₹15,000. Calculate the amount of
    interest each year.

    Case 4: When cash price is not given:

    Question 1: On 1st January, 2016, Ram purchased a machine on hire purchase under hire
    purchase agreement which provided for an initial payment of ₹1500 and the balance in 4 half
    yearly instalments of ₹2,000 each. The first instalment due on 30/06/2016, rate of interest @
    6% p.a.

    Question 2:

    A machinery was purchased on 01/01/2012 on hire purchase system. The payment of


    instalment including interest @ 5% p.a. to be made as follows:

    At the end of 2012 ₹6,000

    At the end of 2013 ₹7,750

    At the end of 2014 ₹8,400

    Calculate the cash price.

    Question 3:

    Ram purchased a machine on hire purchase system. He paid ₹8,000, ₹7,000, ₹6,000 at the end
    of 2nd, 4th and 6th year respectively. Rate of interest charged by the vendor @ 10% p.a.
    Calculate the cash price.

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