43(When the rate of interest and instalments are given)

cash price,
purchased two trucks on hire purchase system price being
on 1* April 2018, the
Mustration cash
Mr.Hanuman to be made as follows: On signing of the after 15,000 being
contract? 15,000and there
is
payment
and rate 20% p.a.
3 years. Interest was charged 5% p.a. off at the of

s6,000 for at Depreciation was written

annually balance system.
paid
reducing Method.
onthe necessary ledger accounts in the books of Mr.Hanuman under Asset Accural
Prepare

Solution:
Method
Accural
Asset

Working:
of interest
Caalculation
(0
56,000
Particulars

price of the Truck 15,000

Cash
payment 41,000
Less: Down
2,050
Balance due
Add: 5% interest for the 1t year 2018-19 43,050
15,000

Less: 1t installment paidA 28,050

1,403
Balance due
year 2019-20 29,453
Add: 5% interest for the 2nd
15,000

14,453
Less: Il installment paid
547
due
Balance
(Bal. Fig.) 15,000
3rd year 2020-21
Add: Interest for the
15,000
Nil
Ill Installment

0 Balance Due

(i) Calculation of Depreciation

56,000
Particulars
11,200
Cash price of the Truck
year 2018-19 44,800
Less: 20% depreciation for the 1 8,960
Balance 2019-20 35,840
for the 2nd year
Less: 20% depreciation 7,168
Balance 28,672
year 2020-21
Less:
for the
20% depreciation for 3rd

Balance
 108 Financial Accoun ting and
Reporting

Calculation of cash price in each instalment:

Instalment- Interest Cash Price

IInstalment:15000 2050 = 12,950;
IlInstalment : 15000- 1403 = 13,597:
Ill Instalment:15000 547 = 14,453.
In the books of Hanuman (Hire Purchaser)
Dr.
Trucks Account

Date Particulars Date Particulars

11,200
1.4.2018 To Bank Account 15,000 31.3.2019 By Depreciation
12,950 31.3.2019 16,750
31.3.2019| To Hire Vendor's Account By Balance c/d
27,950 27,950
8,960
1.4.2019 To Balance b/d 16,750 31.3.2020 By Depreciation
21,387
31.3.2020To Hire Vendor's Account 13,597 31.3.2020 By Balance c/d
30,347
30,347
7,168
1.4.2020 To Balance b/d 21,387 31.3.2021 By Depreciation
By Balance c/d 28,672
31.3.2021|To Hire Vendor's Account 14,45331.3.2021
35,840
35,840

1.4.2021 To Balance b/d. 28,672

Cr.
Dr. Hire Vendor's Account
Date Particulars
Date Particulars
15,000 31.3.2019 By Truck's Account 12,950
31.3.2019 To Bank Account
31.3.2019 By InterestAccount 2,050

15,000 15,000

15,000|31.3.2020 By Truck's Account 13,597

31.3.2020To Bank Account 31.3.2020 By Interest Account 1,403

15,000 15,000
15,00031.3.2021 By Truck's Account
To Bank Account 14,453
31.3.2021 31.3.2021 By Interest Account 547

15,000
15,000
Interest Account
Dr. Cr.
Date
Date Particulars Particulars
2,050 31.3.2019
31.3.2019 To Híre Vendor's Account By P/LACcount
2,050
2,050
2,050
Vendor's Account
31.3.2020To Hire 1,40331.3.2020 By P/LACcount 1,403
1,403
31.3.2021 To Hire Vendor's Ac/ 1,403
54731.3.2021 By P/LACcount 547
547
547
5)

Hire Purchase Accounting 109

Depreciation Account Cr.
Dr.

Date Particulars Date Particulars

31.3.2019 To Truck's Account 11,20031.3.2019 By P/LAccount 11,200

11.200 11,200
31.3.202d To Truck's Account 8,960|31.3.2020 By P/LAccount 8,960
8,960 8.960
31.3.2021 To Truck's Account 7,16831.3.2021 By P/LAccount 7,168
7,168 7,168
llustration 14(When the cash price, rate of interest andinstalmentsare given)