The document provides information and solutions for two hire purchase accounting problems. The first problem provides details of transactions for Bright Star Ltd. and calculates amounts for hire purchase trading, shop stock, and memorandum accounts. The second problem provides transactions for Decor Ltd. and calculates amounts for their hire purchase stock, debtors, and adjustment accounts. Both problems calculate amounts using the hire purchase trading method and stock and debtors method to record hire purchase transactions and calculate profit.
The document provides information and solutions for two hire purchase accounting problems. The first problem provides details of transactions for Bright Star Ltd. and calculates amounts for hire purchase trading, shop stock, and memorandum accounts. The second problem provides transactions for Decor Ltd. and calculates amounts for their hire purchase stock, debtors, and adjustment accounts. Both problems calculate amounts using the hire purchase trading method and stock and debtors method to record hire purchase transactions and calculate profit.
The document provides information and solutions for two hire purchase accounting problems. The first problem provides details of transactions for Bright Star Ltd. and calculates amounts for hire purchase trading, shop stock, and memorandum accounts. The second problem provides transactions for Decor Ltd. and calculates amounts for their hire purchase stock, debtors, and adjustment accounts. Both problems calculate amounts using the hire purchase trading method and stock and debtors method to record hire purchase transactions and calculate profit.
Bright star Ltd sold goods on hire purchase system making profit 33 1/3 % on sales. From the following particulars prepare Hire purchase trading account: 1.1.2020: Stock with customers at hire purchase price 45,000 Shop Stock 90,000 Installment Due 25,000 31.12.2021: Cash received from customers 3,00,000 2,500 Instalment Due 45,000 Shop Stock (excluding repossessed stock) 1,00,000 Goods purchased during the year 3,00,000 Solution: Dr. Bright Star Ltd. Cr. Hire Purchase Trding Account for the year ended 31.12.21 Particulars Amount Particulars Amount Rs. Rs. To Balance b/f By (OP) H.P Stock Reserve A/c 15,000 Hire Purchase Stock (at H.P. price) 45,000 45,000 Hire Purchase Debtors 25,000 3,00,000 By Cash A/c To Goods sold on Hire Purchase A/c 4,35,000 By Goods sold on Hire Purchase A/c (At H.P. Price) (see working note) 1,45,000 4,35,000 To Loss on Repossessed Goods A/c 7,500 – By Repossessed Goods A/c 10,000 To (closing) H.P. Stock Reserve A/c 50,000 (Instalments Unpaid) By Balance c/f: 1,50,000 By Hire Purchase Stock (H.P. Price) 1,50,000 1,02,500 By Hire Purchase Debtors 45,000 To Profit & Loss A/c (balancing fig) 6,65,000 6,65,000 Working Notes: Dr. Memorandum Shop Stock Account Cr. Particulars Amount Particulars Amount Rs. Rs. To Balance b/f 90,000 By Goods Sold on Hire Purchase A/c 2,90,000 To Purchase A/c 3,00,000 (At cost – Balancing Figure) By Balance c/f 1,00,000 3,90,000 3,90,000
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Bhalotia Classes (9883034569): Accounts crash course @ 1000 Dr. Memorandum Hire Purchase Stock Account Cr. Particulars Amount Particulars Amount Rs. Rs. To Balance b/f (H.P. Price) 45,000 By H.P. Debtors A/c (Transfer 3,30,000 To Goods Sold on Hire Purchase A/c 4,35,000 from H.P Debtors Account) [H.P. Price = 2,90,000+ of 2,90,000] By Balance c/d (at H.P. Price) 1,50,000 (Balancing figure) 4,80,000 4,80,000
Dr. Memorandum Hire Purchase Debtors Accounnt Cr.
Particulars Amount Particulars Amount To Balance b/f 25,000 By Cash A/c 3,00,000 To H.P Stock A/c (Balancing 3,30,000 By Goods Repossessed A/c 10,000 Figure) By Balance c/f 45,000 3,55,000 3,55,000
6. Hire Purchase: Stock & Debtors Method
Decor Ltd. supply goods on hire purchase system at a profit of 50% over the cost. The following are the transactions for the year ending December 31, 2021:
Stock out on hire at cost on 01/01/2021 60,000
on 31/12/2021 48,000 Instalments Due (customers still paying) On 01/01/2021 5,400 On 31/12/2021 9,000 Goods Repossessed during the year 450 Instalments realised during the year 1,17,000 Prepare the Hire-Purchase Stock A/c, Hire-Purchase Debtors' A/c and the Hire-Purchase Adjustment A/c.
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Bhalotia Classes (9883034569): Accounts crash course @ 1000 Solution: Books of Décor Ltd. Dr. Hire Purchase Stock Account Cr. Date Particulars Amount Date Particulars Amount Rs. Rs. 1.1.21 To Balance b/f 90,000 31.12.21 By Hire Purchase Debtors 1,21,500 [Rs. 60,000 + 50 % ] A/c (Instalments matured) 31.12.21 To Goods Sent on Hire (from H.P Debtors A/c) Purchase A/c (H.P. Price) 1,03,500 31.12.21 By Balance c/f 72,000 (Balancing Figure) [48,000 + 50 %] 1,93,500 1,93,500
Dr. Hire Purchase Debtors Account Cr.
Date Particulars Amount Date Particulars Amount Rs. Rs. 1.1.21 To Balance b/f 5,400 31.12.21 By Bank A/c (instalments 1,17,000 (Opening Instalments Due) collection) 31.12.21 To Hire Purchase Stock A/c 1,21,500 31.12.21 By Repossessed Stock A/c 900 (Balance Figure) (Unpaid instalments) 31.12.21 By Balance c/f 9,000 (Closing Instalments Due) 1,26,900 1,26,900
Dr. Hire Purchase Adjustment Account Cr.
Date Particulars Amount Date Particulars Amount Rs. Rs. 31.12.21 To Balance c/f 24,000 1.1.21 By Balance b/f 30,000 [Closing H.P. Stock [Opening H.P. Stock Reserve] [72,000 x 1/3) Reserve] (90,000 x 1/3) 31.12.21 To Loss on Repossessed 450 31.12.21 By Goods sent on Hire Stock (900 – 450) Purchase A/c 34,500 31.12.21 To Profit & Loss A/c 40,050 [1/3 of Rs. 1,03,500] (Balance Figure) 64,500 64,500 Working Notes: Loading on cost = 50 % hence Loading on H.P. Price = 50/150 = 1/3
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