4. When Installment, total cash price are given but rate of
interest are not given
Case 4
Table Showing Interest
Table Showing Interest
Date Installment O/s Installment
Amt.
Ratio Interest
Ch.
1st
Year
Down pay 1,000 5,000
End of 1nd
Year 2,000 4,000 600 × 4/7 = 342
End of 3th
Year
4
End of 2rd
Year 1,000 2,000 2 600 × 2/7 = 171
1,000 1,000 1 600 × 1/7 = 87
600
7
11. Interest A/c
Particulars ` Particulars `
31-12-2007
Auto Service
31-12-2008
Auto Service
31-12-2009
Auto Service
4,965
4,965
3,465
3,465
1,815
1,815
31-12-2007
Profit & Loss A/c
31-12-2008
Profit & Loss A./c
31-12-2009
Profit & Loss A/c
4,965
4,965
3,465
3,465
1,815
1,815
13. Table Showing Interest
Table Showing Interest
Date Installment Interest Installment
Without Int.
1 Year
Down Pay. 12,000 --- 12,000
End of 3rd
Year
7,700
7,700 – 1,915
= 5,785
End of 4th
Year
7,700
(7,700 – 1,336)
= 6,364
7,700 7,700 × 10/110
= 700
7,700 – 700
= 7,000
CP = 60,000
End of 5th
Year
7,700
= 14,700
+ 7,000
× 10/110
= 1,336
7,700 + 6,364
= 21,064
+ 7,000
× 10/110
= 1,915
Solution 10
Solution 10
End of 2nd
Year
7,700
7,700 – 2,441
= 5,259
7,700 + 5,785
= 26,849
+ 6,364 + 7,000
× 10/110
= 2,441
End of 1st
Year
7,700
7,700 – 2,918
= 4,782
+ 5,259 + 5,785 + 6,364 + 7,000
= 32,108 × 10/110
= 2,918
7,700
14. Machinery A/c
Particular ` Particular `
Year I
M/s. Sole Exports Co. 41,189
Year I
Depreciation
Balance c/d
8,238
32,951
41,189 41,189
Year II
Balance b/d 32,951
32,951 32,951
Year II
Depreciation
Balance c/d
6,590
26,361
Year II
Balance b/d 26,361
Year III
Depreciation
Balance c/d
26,361 26,361
5,272
21,089
Year IV
Balance b/d 21,089
Year IV
Depreciation
Balance c/d
4,218
16,871
21,089 21,089
Year V
Balance b/d
P/L A/c (Profit on sale)
16,871
1,503
Year V
Depreciation
Bank
3,374
15,000
18,374 18,374
15. Sol. 10 In the Books of M/s Coconut Growers
Machinery Company Ltd. A/c
Rs. Rs.
1st
Year
Bank (down Payment)
End of 1st
Year
Bank
End of 1st
Year
Balance c/d
12,000
7,700
24,408
1st
Year
Machine Purchase on HP
End of 1st
Year
Interest
41,189
2,919
44,108 44,108
End of 2nd
Year
Bank
Balance c/d
7,700
19,149
2nd
Year
Balance b/d
End of 2nd
Year
Interest
24,408
2,441
26,849 26,849
End of 3rd
Year
Bank
Balance c/d
7,700
13,364
3rd rd
Year
Balance b/d
End of 3rd
Year
Interest
19,149
1,915
21,064 21,064
16. Rs. Rs.
End of 4th
Year
To Bank
Balance c/d
7,700
7,000
4th
Year
By Balance b/d
End of 4th
Year
Interest
13,364
1,336
14,700 14,700
End of 5th
Year
Bank 7,700
5th
Year
Balance b/d
End of 5th
Year
Interest
7,000
700
7,700 7,700
17. Table Showing Interest
Table Showing Interest
Date Total
Cash Price
Interest Installment
With Int.
Installment
Without Int.
1 Apr. 06
Down Payment
31,360
9,000 --- 9,000 9,000
31 Mar. 07
22,360
6,764 22,360 × 10%
= 2,236 9,000 6,764
31 Mar. 08
15,596
7,440 15,596 × 10%
= 1,560 9,000 7,440
8,156
8,156 844 (b/f) 9,000 8,156
X 4,640 36,000 31,360
31 Mar. 09
Solution 12
Solution 12
18. Rapid Engineering Works A/c
Particular ` Particular `
1-04-2003
Bank A/c (Cash Down)
31-03-2007
Bank A/c
Balance c/d
9,000
9,000
15,596
1-04-2006
Machinery on HP A/c
31-03-2007
Interest A/c
31,360
2,236
33,596 33,596
31-03-2008
Machinery on HP A/c
(Transfer of Bal.)
17,156
1-04-2007
Balance c/d
31-03-2008
Interest A/c
15,596
1,560
17,156 17,156
19. Machinery on Hire Purchase A/c
Particular ` Particular `
Total loss is equal to Rs.8,246 + Interest due Rs.1,560 = Rs.9,860
1-04-2006
Rapid Engineering Works
(Total Cash price)
31,360
1-04-2006
Depreciation A/c
(10% on Rs.31,360)
Balance c/d
3,136
28,224
31,360 31,360
1-04-2007
Balance c/d 28,224
31-03-2008
Depreciation A/c
(10% on Rs.28,224)
Rapid Engineering works
Profit and Loss A/c (B/f)
15,596
1,560
8,246
17,156 17,156
20. Table Showing Interest
Table Showing Interest
Date Total
Cash Price
Interest Installment
With Int.
Installment
Without Int.
1 Apr. 07
Down Payment
8,00,000
2,00,000 --- 2,00,000 2,00,000
31 Mar. 08
6,00,000
2,00,000 6,00,000 × 7.5%
= 45,000 2,45,000 2,00,000
31 Dec. 08
4,00,000
2,00,000 4,00,000× 7.5%
= 30,000 2,30,000 2,00,000
2,00,000
2,00,000 15,000 (b/f) 2.15,000 2,00,000
X 90,000 8,90,000 8,00,000
31 Dec. 09
Solution 13
Solution 13
21. In the Books of Singh Hire Vendor A/c
Particulars ` Particulars `
1-04-2007
Bank A/c
31-03-2008
Bank A/c
(2,00,000 + 45,000)
Balance c/d
2,00,00
2,45,000
4,00,000
1-04-2007
Truck on HP A/c
31-03-2008
Interest A/c
(7 ½ on Rs.6,00,000 )
8,00,000
45,000
8,45,000 8,45,000
31-03-2009
Truck on HP A/c 4,30,000
1-04-2008
Balance b/d
Interest A/c
(7 ½ on Rs.4,00,000)
4,00,000
30,000
4,30,000 4,30,000
22. Truck on Hire Purchase A/c
Particulars ` Particulars `
1-04-2007
Hire Vendor 8,00,000
8,00,000
31-03-2007
Depreciation A/c
(10% on Rs.8,00,000)
Balance c/d
80,000
7,20,000
8,00,000
1-04-2008
Balance b/d 7,20,000
7,20,000 7,20,000
31-03-2009
Depreciation A/c
(10% of Rs.7,20,000)
Hire Vendor A/c
Profit and Loss A/c (B/f)
72,000
4,30,000
2,18,000
23. In the books of Hire Vendor
Singh A/c
Particulars ` Particulars `
1-04-2007
Hire Sales A/c
31-03-2008
Interest A/c
8,00,000
45,000
1-04-2007
Bank A/c
31-03-2008
Bank A/c
Balance c/d
2,00,000
2,45,000
4,00,000
8,45,000 8,45,000
1-04-2008
Balance b/d
31-03-2009
Interest A/c
4,00,000
30,000
31-03-2009
Goods Repossessed A/c
4,30,000
4,30,000
4,30,000
24. Goods Repossessed A/c
Particulars ` Particulars `
31-03-2007
Singh A/c
Bank (Repairs) A/c
Profit and Loss A/c
4,30,000
20,000
7,500
31-03-2009
Bank (Sales) A/c 4,57,500
4,57,500 4,57,500
29. In the Book on Y Co. Ltd. Goods (Machines) Repossessed A/c
Rs. Rs.
1-1-2009
X Co. Ltd.
Bank (Repairs)
1-07-2009
P/L a/c (Profit)
1,47,000
15,000
39,000
1-07-2009
Bank A/c
(Sale price of one machine)
Balance c/d
1,20,000
81,000
2,01,000 2,01,000
30. Working Notes
(i) Value of Machine
Retained
(ii) Value of Machines Repossessed
Cash price of one
machine
Less: Dep. for First
Year @ 20%
Less: Dep. for Second
year @ 20%
1,50,000
30,000
1,20,000
24,000
Cash Price of two machine
Less: Depreciation for First Year @
30%
Less: Depreciation for Second Year
@ 30%
3,00,000
90,000
2,10,000
63,000
96,000 1,47,000
31. (iii) Calculation of Loss on Repossession to the Purchaser
Rs.
Written down value of two machines from
Purchaser point of view i.e. 3,00,000 – 60,000 – 48,000
1,92,000
(Depreciation being 20% on W.D. V basis)
Less: Written down value from hire seller point
of view, depreciation being 30% on
written down value (3,00,000 – 90,000 – 63,000)
1,47,000
Loss on Repossession to the purchaser
45,000
(iv) Calculation of Profit on Sale of one Repossessed Machine
Sale price of one machine
33. Sol. 20. In the Books of Kartar (Hire Purchaser) Trucks on Hire Purchase A/c
Rs. Rs.
1 Oct. 2006
Hire Vendor 27,50,000
31 March 20074
Depreciation A/c
(@ 15% for 6 months)
Balance c/d
2,06,250
25,43,750
27,50,000 27,50,000
1 April 2007
Balance b/d 25,43,750
30 Sep. 2007
Depreciation A/c
(@ 15% for 6 months on the
original cost of 5 trucks)
Hire Vendor A/c
Profit and Loss A/c (b/f)
31 March 2008
Depreciation A/c
(@ 15% on 3 trucks for 6 months)
Balance c/d
2,06,250
8,25,000
1,10,000
1,23,750
12,78,750
25,43,750 25,43,750
34. In the Books of Hire Vendor Kartar A/c
Rs. Rs.
1 Oct. 2006
Hire Sales A/c
31 March 2007
Interest A/c
27,50,000
1,10,000
1 Oct. 2006
Bank A/c
31 March 2007
Bank A/c
Balance c/d
2,75,000
6,87,500
18,97,500
28,60,000 28,60,000
1 April 2007
Balance b/d
30 Sep. 2007
Interest A/c
31 March 2008
Interest A/c
(on Rs.11,50,000) for 6
months @ 10%)
18,97,500
82,500
57,750
30 Sep. 2007
Goods Repossessed A/c
3 March 2008
Bank A/c (2,31,000 + 57,750)
Balance c/d
8,25,000
2,88,750
9,24,000
20,37,750 20,37,750
1 April 2008
Balance b/d 9,24,000
35. (i) Value of 3 Trucks
Retained
Rs. Value of 2 Trucks Returned Rs.
(ii) Loss on Repossession can be verified as follows.
Value of two trucks from Purchaser’
Point of view:
Cash price of two trucks 11,00,000
Less: depreciation for one year
on original cost @ 15% 1,65,000
9,35,000
Less: As valued by Hire Vendor 8,25,000
Loss on Repossession 1,10,000
(iii) Calculation of Interest
Total interest is 10% of the cash price
(10% of 27,50,000)
As there are four equal instalments, the interest will be apportioned in the ratio
of 4 : 3 : 2 : 1
Cash Price of 3 Trucks
Less: Dep. for 1 ½ Yrs.
@ 15% on original cost
16,50,000
3,71,250
Cash Price of two trucks
Less: Dep. @ 25%
11,00,000
2,75,000
12,78,750 8,25,000
36. Interest included in first Instalment
2,75,000 × 4/10 = Rs.1,10,000
Interest included in second instalment
2,75,000 × 3/10 = Rs.82,500
Interest from 1 Oct. 2007 to 31 March 2008 is calculation as:
Total cash price of 5 trucks 27,50,000
Add: Interest on first instalment 1,10,000
Interest on second instalment 82,500
29,42,500
Less: Payment made
Down Payment 2,75,000
First Instalment 6,87,500 9,62,500
19,80,000
Less: Value of Trucks returned 8,25,000
Amount due on the date of default 11,55,000
Add: Interest @ 10% on Rs.11,55,000
for 6 months 57,750
12,12,750
Less: Instalments (2,31,000 + 57,750) 2,88,750
Balance to be paid in future 9,24,000
37. Goods Repossessed A/c
30 Spr. 2007 Rs. Oct. 2007 Rs.
Kartar’ A/c
Oct. 2007
Bank A/c (Repairs)
Profit and Loss A/c
8,25,000
60,000
65,000
Bank A/c 9,50,000
9,50,000 9,50,000
38. Rs. Rs.
Sol. 28. In the Books of Welwash (Pvt.) Ltd.
Hire Purchase Trading A/c
For the Year Ending 31 March 2007
Balance b/d :
Instalments Not Due A/c
(500 × 675)
Instalments Due A/c
(500 × 3)
Goods Sold on HP A/c
(1,350 × 80)
Stock Reserve
(3,000 × 4,05,000 /
13,500)
Profit and Loss A/c (profit)
3,37,500
1,500
10,80,000
90,000
2,25,000
Stock Reserve A/c
(3,000 / 13,500 × 3,37,500)
Cash (Down payment and
instalments received)
Goods Repossessed
(13,500 – 1,500 – 2,500)
(or 500 × 19)
Goods Sold on HP A/c (Load)
(3,000 / 13,500 × 10,80,000)
Balance c/d:
Instalments Not Due A/c
(500 × 810)
Instalments Due A/c
75,000
10,02,000
9,500
2,40,000
4,05,000
2,500
17,34,000 17,34,000
39. Rs. Rs.
Trading and Profit and Loss A/c
For the year ending 31 March 2007
Opening Stock
(10,500 × 26)
Purchases
[10,500 × 205 (130 + 80 +
21 - 26)]
Gross Profit c/d
2,73,000
21,52,500
2,34,000
Sales (12,300 × 130)
Goods Sold on HP A/c (at cost)
(10,80,000 – 2,40,000)
or
10,500 × 80
Stock at the end (10,500 × 21)
(At cost)
15,99,000
8,40,000
2,20,500
26,59,500 26,59,500
Sundry Expenses
Provision for Income Tax
(35% of Rs.3,00,000)
Net Profit
1,60,000
1,05,000
1,95,000
Gross Profit b/d
Hire Purchase Trading A/c
(Profit on H.P.)
Goods Repossessed
(Profit on sale of goods
repossessed)
2,34,000
2,25,000
1,000
4,60,000 4,60,000
40. Working Notes
(i) Calculation of Value of Goods Repossessed Rs.
Rs.
Hire Purchase Price of Washing Machine
13,500
Less: Down Payment 1,500
Instalments (500 × 5) 2,500
4,000
Or
No. of Instalments due 19
Amount of each instalment 500
9,500
Total 500 × 19 = 9,500
(ii) Calculation of Washing Machines Purchased
No.
No.
Stock at the end 21
Add: Cash Sales 130
Sales on Hire Purchase Basis 80
231
Less: Opening Stock
26
Purchases during the year
205
Total cost of purchases: 10,500 × 205
41. Working Notes
(iii) Cash Collected During the Year
Rs.
Instalments not due on 1-4-06
3,37,500
Instalments due on 1-4-06
1,500
Hire purchase price of goods sold during 2006-07
10,80,000
14,19,000
Less: Repossessed goods 9,500
Instalments not due on 31-3-07 4,05,000
Instalments due on 31-3-07 2,500
4,17,000
Cash received during the year
10,02,000
42. Rs. Rs.
Instalments No. Due A/c
Rs. Rs.
Instalments Due A/c
Balance b/d
Goods Sold on HP A/c
3,37,500
10,80,000
Instalments Due A/c
(Transfer)
Balance c/d
10,12,500
4,05,000
14,17,500 14,17,500
Balance b/d
Instalments Not Due A/c
(Transfer)
1,500
10,12,500
Goods Repossessed A/c
Cash (B/f)
Balance c/d
9,500
10,02,000
2,500
10,14,000
10,14,000
43. Rs. Rs.
Sol. 29 Omega Corporation
Hire Purchase Trading A/c
Balance b/d:
Instalments Not Due A/c
(30 × 5,000)
Goods Sold on HP A/c
(240 × 50,000)
Stock Reserve A/c
(20% of Rs.30,00,000)
Profit and Loss A/c
(Profit)
1,15,000
1,20,00,000
6,00,000
18,00,000
Stock Reserve A/c
(1,50,000 × 2/100)
Cash A/c
Goods Sold on HP A/c (Loa)
(20% of 1,20,00,000)
Goods Repossessed at original
cost less 50%)
(2 × 40,000 × 50%)
Balance c/d
Instalments Due
[(2 + 2) + (1 × 6)] × Rs.5,000
Instalments Not Due
[(8×50) + (6 ×30) + (1×20) ×
5,000]
30,000
90,30,000
24,00,000
40,000
50,000
30,00,000
1,45,50,000
1,45,50,000
44. Rs. Rs.
(i) Calculation of cash collected
Instalments Not Due A/c
Rs. Rs.
Instalments Due A/c
Balance b/d
(30 × 5,000)
Goods Sold on HP A/c
(240 × 50,000)
1,50,000
1,20,00,000
Instalments Due A/c
(Transfer)
Goods Repossessed A/c
(2 × 5,000)
Balance c/d
91,40,000
10,000
30,00,000
1,21,50,000 1,21,50,000
Instalments Not Due A/c
(Transfer) 91,40,000
Cash (B/f)
Goods Repossessed A/c
(6 × 2 × 5,000)
Balance c/d
90,30,000
60,000
50,000
91,40,000 91,40,000
45. (ii) Instalments Not Due on 31-12-2009
Rs.
8 Instalments each on 50 Computers (8 × 50)
400
6 Instalments each on 30 Computers (6 × 30)
180
One Instalment each on 20 Computers (1 × 20)
20
Total instalments Not one
600
Amount 600 × Rs.5,000 = Rs.30,00,000
(iii) Instalments Due but not Collected
2 Instalments each on 2 Computers (2 × 2)
4
1 Instalment each on 6 Computers (1 × 6)
6
Total Instalments Not Collected
10
46. The entry would be:
Goods Repossessed A/c Dr. Rs.70,000
To Instalments Not Due A/c Rs.10,000
To Instalments Due A/c Rs.60,000
(v) Valuation of goods for Hire Purchase Trading A/c
Cost of 2 Computers (40,000 × 2)
80,000
Less: 50%
40,000
40,000
![Rs. Rs.
Trading and Profit and Loss A/c
For the year ending 31 March 2007
Opening Stock
(10,500 × 26)
Purchases
[10,500 × 205 (130 + 80 +
21 - 26)]
Gross Profit c/d
2,73,000
21,52,500
2,34,000
Sales (12,300 × 130)
Goods Sold on HP A/c (at cost)
(10,80,000 – 2,40,000)
or
10,500 × 80
Stock at the end (10,500 × 21)
(At cost)
15,99,000
8,40,000
2,20,500
26,59,500 26,59,500
Sundry Expenses
Provision for Income Tax
(35% of Rs.3,00,000)
Net Profit
1,60,000
1,05,000
1,95,000
Gross Profit b/d
Hire Purchase Trading A/c
(Profit on H.P.)
Goods Repossessed
(Profit on sale of goods
repossessed)
2,34,000
2,25,000
1,000
4,60,000 4,60,000](https://image.slidesharecdn.com/chapter-6hirepurchaseexample-250619113648-0c2515c8/85/Chapter-6-Hire-Purchase-Example-power-point-presentationppt-39-320.jpg)
![Rs. Rs.
Sol. 29 Omega Corporation
Hire Purchase Trading A/c
Balance b/d:
Instalments Not Due A/c
(30 × 5,000)
Goods Sold on HP A/c
(240 × 50,000)
Stock Reserve A/c
(20% of Rs.30,00,000)
Profit and Loss A/c
(Profit)
1,15,000
1,20,00,000
6,00,000
18,00,000
Stock Reserve A/c
(1,50,000 × 2/100)
Cash A/c
Goods Sold on HP A/c (Loa)
(20% of 1,20,00,000)
Goods Repossessed at original
cost less 50%)
(2 × 40,000 × 50%)
Balance c/d
Instalments Due
[(2 + 2) + (1 × 6)] × Rs.5,000
Instalments Not Due
[(8×50) + (6 ×30) + (1×20) ×
5,000]
30,000
90,30,000
24,00,000
40,000
50,000
30,00,000
1,45,50,000
1,45,50,000](https://image.slidesharecdn.com/chapter-6hirepurchaseexample-250619113648-0c2515c8/85/Chapter-6-Hire-Purchase-Example-power-point-presentationppt-43-320.jpg)
