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Hire-Purchase and Instalment Purchase Systems

Question.1 (When cash price, rate of interest and instruction of payment are given) Ram purchased a machine on
hire purchase basis. The cash price was Rs. 2,40,000 payable Rs. 40000 as down and balance in 4 equal
instalments together with interest @ 10% p.a. Calculate Installment.

Question.2(when rate of interest, total cash price and installments are given) Maheer purchases a car on hire-
purchase system. The total cash price of the car is Rs, 15,980, payable Rs 4000 down and three installments of Rs.
6,000. Rs. 5,000 and Rs. 2000 payable at the end of first, second and third year respectively. Interest is charged at
5% p.a. You are required to calculate interest paid by the buyer to the seller each year.

Question.3 A Ltd. purchased machinery from B Ltd. on hire purchase basis on the following terms: Cash Price- Rs.
7,92,500 , Cash down payment- 20% ,Balance to be discharged in 4 annual instalment of Rs.2,00,000 each (inclusive of interest @ 10%)
to be paid at the end of each year. Compute the payment of interest to be made each year.

Question.4. Cash price of assets purchased on hire-purchase system Rs - 37,500. Down payment Rs. 5,000, Annual
installment: 5 of Rs. 7,500 each. Rate of interest: 5% Calculation interest included in each instalment.

Question.5. (when total cash price and instalments are given but rate of interest is not given) A cycle, cash price of
which is Rs. 180 is sold on hire-purchase system for Rs. 200 payable in four quarterly instalments of Rs. 50 each. The
first payment is made at the end of the first quarter. Show how interest is calculated.

Question.6. Calculate interest:

Cash price 1,00,000
Rate of interest ?
Down payment 20,000
First installment 40,000
Second installment 30,000
Third installment 30,000
Answer: Interest 10,526; 6,316; 3,158.

Question.7 (when only installments are given but cash price and rate of interest are not given) Mr. A purchased a
personal computer on Jan. 1. 1996 on hire-purchase paying Rs.15,000 cashdown and balance in four annual installments
of Rs. 14,000. Rs.13, 000.Rs. 12.000 and Rs.11,000.Each installment comprising equal amount of cash price, at the end
of each accounting period. You are required to calculate total cash price, and amount of interest in each installment.

Question.8. Company purchased a machinery on the following agreement basis. It was agreed to pay Rs 55,000 as first
installment, Rs 50,000 as second installment, Rs 45,000 as third installment and Rs 40,000 as fourth installment along
with a down payment of Rs 10,000. Find cash price, hire purchase price and total interest. Assuming cash price portion is
equal in each installments.

Question.9.(when rate of interest and instalments are given but total cash price is not given).
Cash Price ?
Down payment 10,000
First installment 14,000
Second installment 23,000
Third installment 11,000
Rate of interest 10%
Ans: Cash Price Rs 50,000.

Question.10.(when rate of interest and instalments are given but total cash price is not given)
X purchased a radiogram on hire-purchase system. As per terms he is required to pay Rs. 800 down, Rs. 400 at the end
of first year Rs. 300 at the end of second year, and Rs. 700 at end of third year. Interest is charged at 5% p.a.
You are required to calculate total cash price of radiogram and interest paid with each instalment.

Question.11. A acquired on 1st January, 2003 a machine under a Hire-Purchase agreement which provides for 5 half
yearly instalments of Rs. 6,000 each, the first instalment being due on 1 st July, 2003. Assuming that the applicable rate of
interest is 10 per cent per annum, calculate the cash value of the machine. All working should form part of the answer.
(May 2003) 8 marks

Question 12.( ANNUITY METHOD) On 1stjan 2010, X purchase a plant from Y on hire purchase system. The hire
purchase rate was settled at Rs 60,000, payable as to Rs 15,000 on 1.1.2010 and 15,000 at the end of 3 successive year.
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Interest @5% p.a. the asset was to be depreciated in the books of purchaser at 10% p.a. on reducing balance method.
Given the present value of an annuity of Re 1 p.a. @ 5% interest is Rs 2.7232. Ascertain the cash price.

Question13. On 1st January. 2013, Globe Press purchased a printing machine on hire-purchase system from Modern
Machinery Co. The payment was to be made as Rs. 30,000 down and the balance in three equal installments of Rs.
20,000 each payable on 31st December. The vendor company charged interest @ 8% p.a. Globe Press provided
depreciation @ 10% p.a. on the diminishing balances and paid all the instalments. It closes its books on 31st December
every year. The cash down value of machine was Rs. 81,543. Show the (a) Modern Machinery Co.'s Account and (b)
Printing Machine Account in the books of Globe Press for 3 years. (C.M.A. (Inter)

Question14 (Full Repossession) A Machinery is sold on Hire Purchase. The terms of payment is four annual instalments
of Rs. 6,000 at the end of each year commencing from the date of agreement. Interest is charged @ 20% and is included
in the annual payment of Rs. 6,000.
Show Machinery Account and hire Vendor Account in the books of the purchase who defaulted in the payment of the
third yearly payment where upon the vendor re-possessed the machinery. The purchaser provides depreciation on the
machinery @ 10% p.a. All working should form part of your answer. [ANSWER: Cash price - Rs. 15,533, loss on
repossession = 324]

Question15. (Full Prepossession) AB Ltd. Purchased from CD Ltd. a machine costing Rs. 1,20,000 on hire purchase
system. Payment was to be made
Rs.30,000 down and the remainder in three equal installments together with interest at 5%. AB Ltd. writes off
depreciation @ 20% on the diminishing balance method. It paid the installments at the end of the first year but could not
pay the next.
Give the necessary ledger accounts in the books parties for two years if the hire vendor took possession of the machine.
The hire vendor spent Rs. 5,800 on getting the trucks thoroughly overhauled and sold them for Rs. 70,000. [Answer.:
Loss on default: Rs. 13,800; Profit on sale of goods repossessed Rs. 1,200.]

Question.16(partial repossession) P purchased 4 cars at Rs. 14,000 each on hire-purchase system. The hire-purchase
price for all the four cars was Rs. 60,000, to be paid Rs. 15,000 down and three instalments of Rs. 15,000 each at the end
of each year. Interest is charged at 5% p.a. Buyer depreciates cars at 10% p.a. on straight line method.
After having paid down payment and first instalment, buyer could not pay second instalment and seller took possession
of 3 cars at an agreed value to be calculated after depreciating cars at 20% p.a. on written down value method. One car
was left with the buyer.
Seller, after spending Rs. 1,200 on repairs, sold away all the three cars to X for Rs. 35,000. Open ledger accounts in the
books of both the parties.(CA-IPCC, CMA INTER, B.COM)(Really pyara question)

Question 17. (partial repossession) X purchased seven trucks on hire-purchase on 1 -7-98. The cash price of each
truck was Rs. 50,000. He was to pay 20% of the cash price at the time of delivery and the balance in five half-yearly
instalments starting from 31-12-98 with interest @ 5% per annum.
On X’s failure to pay the installment due on 30.6.99 it was agreed that X would return 3 trucks to the vendor and the
remaining 4 would be retained by him. The vendor agreed to allow him a credit for the amount paid against these 3
trucks less 25%. Show the relevant account in the books of X assuming that his books are closed in June every year
and depreciation @ 20% is charged on trucks. CA (Inter 16 Marks), B.COM(H)

Question 18. (Partial repossession)Bombay Roadways Ltd. purchased three trucks costing Rs. 1,00,000 each from
Hindustan Auto Ltd. on 1st January, 1998 on the hire-purchase system. The terms were:—
Payment on delivery Rs. 25,000 for each truck and balance of the principal amount by 3 equal installments plus interest
at 15% per annum to be paid at the end of each year. Bombay Roadways Ltd. writes off 25% depreciation each year on
the diminishing balance method.
Bombay Roadways Ltd. paid the instalments due on 31st December, 1998 and 31st December, 1999 but could not pay
the final instilment. Hindustan Auto Ltd. re-possessed two trucks adjusting values against the amount due. The re-
possession was done on 31st Dec. 2000 on the basis of 40% depreciation on the diminishing balance method. You are
required to:—
(a) write up the ledger accounts in the books of Bombay Roadways Ltd. showing the above transactions up to 31-12-
2000, and
(b) Show the disclosure of the balances arising from the above in the Balance Sheet of Bombay Roadways Ltd. as on 31st
December, 2000. (C.A. Inter 16 Marks)

Question 19. (Partial Prepossession) X Transport Ltd. Purchased form-Delhi Motors three tempos costing Rs. 50,000
each on the hire purchase system on 1. 1. 1987. Payment was to be made Rs. 30,000 down and the remainder in three
equal annual installments payable at the end of every year together with interest @ 9% X Transport Ltd. write off
depreciations @ 20% on diminishing balance. It paid, the instalment due at the end of first year i.e., 31.12.1987 but could
not pay the next on 31. 12. 1988. Delhi Motors agreed to leave one tempo with the purchaser on 1.1.1989 adjusting the
value of the other two tempos against the amount due on 01. 01.1989. The tempos repossessed were valued on the basis
of 30 % depreciation annually. Show the necessary accounts in the books of X Transport Ltd. for the years 1987, 1988

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and 1989.[ Ans: Value of tempos taken away at the end of 2nd year Rs. 49,000. Loss on Repossession = Rs. 15,000]

Question: 20(Partial Repossession) On 1July 2006, X Ltd. bought from Y Ltd. a plant whose cash price was Rs.
74,340; payment to be made by four bi-annual instalments of Rs. 20,000 each. The first one being due on 31 December,
2006. Interest had been taken into account at 6% p.a. A clause in the agreement gave the vendors the right to seize the
plant if the purchaser defaulted on any instalment. X Ltd. paid the first instalment but failed to pay the next. It was agreed
that X Ltd. Should retain the plant of which the original cash price was Rs. 32,000 and bear the loss on the remainder
(which was sold on 13 July 2007 for Rs. 40,248), Y Ltd. waiving the interest accruing after 30 June 2007 included in the
instalments’ under the original agreement. Another agreement was entered into for the liquidation of the balance.
Show the plant account, vendor's account and plant surrendered account in the books of X Ltd. from 1 July2006 to 30
June 2007 taking depreciation at 5% p.a. half yearly on reducing balance assuming that X Ltd. makes up its accounts
half yearly to 30 June and 31 December. (YE QUESTION SIRF MAIN SOLVE KAR SAKTA HU. AUR KISI KI
AUKAT NAHI)

Question 20: On 1 October, 2006, five trucks were purchased by Kavita on the hire purchase system. The cash price of
each truck was Rs. 5,50,000. The payment was to be made as follows:
(i) 10% of cash price at the time of delivery.
(ii) 25% of cash price at the end of each one of the subsequent four half years.
The payment due on 30 September 2007 could not be made; hence trucks were seized by the hire vendor. However after
negotiations, Kavita was allowed to retain three trucks on the condition that the value of the other two trucks would be
adjusted against the amount due, the trucks being valued at cost minus 25 per cent depreciation and Kavita would pay the
balance in five half years installments together with interest at 10% annum. Both the parities close their books on 31
March every year. Kavita charges 15% depreciation on trucks on the original cost. Unfortunately on 5 April, 2008, a fire
destroyed all the three trucks in the possession of Kavita. The insurance company admitted the full claim on the basis of
the balance in Trucks Account on 31 March, 2008. Kavita settled the account with the hire vendor on 30 April, 2008 on
receiving the payment from the insurance company. The hire vendor waived the interest accrued after 31 March, 2008.
Prepare (i) Trucks Accounts and (ii) Kavita Account upto the final settlement date. (EK AJEEB SI SHAKTI AA CHUKI
HAI MERE ANDER. MAI BAHUT HI SHAKTISHALI FEEL KR RAHA HU)

INTEREST SUSPENSE METHOD

Question.21. A ltd has hire purchase business and the installments are collected over three year period. It decides to
st nd rd
allocate the interest as follows: 1 year 50%, 2 year 30%: 3 year 20%
The hire purchase sales for the first four years were as under:
st
1 year –Rs 10,000 of which Rs 2000 is interest
nd
2 year – Rs 20,000 of which Rs 4,000 is interest
rd
3 year – Rs 30,000 of which Rs 6,000 is for interest
th
4 year- Rs 60,000 of which Rs 10,000 is for interest
Show interest suspense account and profit and loss accounts for the relevant years

Question.22 A Company sells goods on hire-purchase on the basis of 25% down, the balance, with 20% interest
th st
thereon, being payable in 8 quarterly instalments on 31st March, 30th June. 30 September and 31 Dec. each year.
The first instalment is payable at the end of each quarter in which the sale is made. The company transfers 50%,30%
and 20% of the interest to the profit and loss account in the first, second and third year respectively.
Balance on 1st January, 1996: Rs.
Hire-Purchase debtors 75,375
Hire-purchase interest suspense 9,900
Hire-purchase sales (exclusive of interest), which have evenly occurred over each of the calendar years, are:
1994 80,000
1995 1,00,000
1996 76,000
All dues were promptly paid in each year. Make out for the year 1996 H.P. Debtors
account and H.P. Interest suspense account and prove the opening and closing balances
of the latter account. [C.A. (Final)]

ADVANCE QUESTIONS ON COMPUTATION OF INSTALLMENTS- - NOT FOR B.COM STUDENTS

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Accounting treatment of small items sold on a regular basis in the book of HIRE
VENDOR(SELLER)
 Stock and debtor system and H.P trading/Final Account Method.

Question.25. Y Ltd. sells products on hire purchase terms, the price being cost plus 33.33%. From the following
particulars for 2013, prepare Hire Purchase Debtors Account, Stock Reserve Account and Hire Purchase Adjustment
Account (for profit):
2013 ₹
January 1 Stock out on hire at Hire Purchase Price 1,20,000
Stock in hand, at Shop 15,000
Installment due (Customers still paying) 9,000
December 31 Stock out on hire at Hire Purchase Price 1,38,000
Stock in hand, at Shop 21,000
Installments due (Customers still paying) 15,000
During 2013 Cash received during the year 2,40,000
[Ans.: Profit = ₹61,500]
Question.26. Kailash Brothers have a hire- purchase department which sells goods at cost plus 50% From the
th
following information, you are required to calculate the profit made for the year ended 30 September,2021:
₹
Stock on hire with customers at selling price as on 30th September, 2020 27,000
Stock at shop - at cost - as on 30th September, 2020 54,000
Installments due (30.9.2020) 15,000
Cash received from customers 1,80,000
Goods repossessed (installments due Rs. 6,000) 1,500
Installments due from paying customers (30.9.2021) 27,000
Closing stock at shop (including repossessed goods) 61,500
Purchases made in the year 1,80,000
(May 1992—10 marks)
[Ans.: Profit = ₹61,500]
Question 27. Bright Safe Company supplies its products on hire purchase system at a profit of 50% above cost. The
following are the transactions for the year ending on December 3 1 , 2 0 2 1 :
₹
January 1 Stock out on hire at cost 20,000
Installments due (Customers still paying) 1,800
Goods repossessed during the year for installments unpaid
₹300, evaluated at ₹150
Installments collected during the year 39,000
December 31 Stock out on hire (at Cost) 16,000
Installments due (Customers still paying) 3,000
Prepare the Hire Purchase Trading and other important accounts. [Profit = ₹13,350]

Question.28 From the following prepare Hire Purchase Trading Account of M/s Calcutta Traders who sell goods on
hire purchase basis at cost plus 25%.
₹
Installments not due on 3 1. 12. 2020 3,00,000

Installments due and collected during 2021 8,00,000

Installments due but not collected during 2021

(including ₹10,000 for which goods were repossessed) 50,000

Installments not due on 31-12-2021(including

₹20,000 for which goods were repossessed.) 3,70,000

Installments collected on repossessed stock 15,000

M/s. Calcutta Traders valued repossessed stock at 60% of original cost. [Ans. Profit - ₹1,65,600]

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Question.29 COC sells goods on hire-purchase basis at a profit of 50% of on cost. Following particulars are given to you
relating to the business during 2021 :
Hire-purchase Stock (at selling price) as on 1-1-2021 9,000

Installments due on 1-1-2021 5,000

Goods sold on hire-purchase during the year (at selling price) 87,000

Cash received from hire-purchase customers during the year 60,000

Goods repossessed (installments due ₹2,000) as valued 500

Hire-Purchase Stock (at selling price) as on 31-12-2021 30,000

st
Installments due on 31 December, 2021 9,000

Prepare Hire-purchase Trading Account showing the profit earned for the year 2021.[Delhi B. Com. (Hons.)]

Question 30. CEE Ltd. has a hire-purchase department. Goods are sold on hire-purchase at cost plus 40%. From the information
given below, prepare Hire-Purchase Trading Account in the books of CEE Ltd.:
₹
st
1 July. 2021 Goods out on Hire-Purchase 21,000
(At hire-purchase price)
th
During the year ended 30 June, 2022:
Goods sold on Hire-purchase 1,05,000
(at hire-purchase price)
Cash received 70,000
Goods received back valued at 800
(hire-purchase installments unpaid ₹2,800)
30th June, 2022 Goods with Hire-Purchase Customers 45,500
(at hire-purchase price) *ICWA (Inter)+

Answer: In the Books of CEE

HIRE-PURCHASE TRADING ACCOUNT
1.7.2021 To Opening Stock 21,000 30.6.22 By Bank 70,000
To Goods sold on Hire Purchase “ By Repossessed Stock A/c 800 7,700
To Stock Reserve 1 05,000 “ By Installment due
40 13,000 “ By Stock Reserve 6,000
------- x 45,500 40
140 “ ------------- x21,000
To Gross Profit c/d 140
21,000 By Goods sold on 30,000
“ Hire-Purchase (Load) By 45,500
Closing Stock

1,60,000 “ 1,60,000
Working Notes:
Instilments clue: ₹ ₹
Hire-Purchase price of opening stock 21,000
Add : Goods sold on hire-purchase price 1,05,000
Less: Cash received 70,000
Hire-purchase price of Repossessed stock 2,800
Closing stock at hire-purchase price 45,500 1,18,300
7,700

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Question.31 A Trader sold out goods on hire-purchase at a profit of 25% on cost price. Prepare (a) Hire-purchase Stock
Account (Double column), (b) Shop Stock Account, and (c) Hire-Purchase Debtors' Account in the books of the Trader
from the following details:
Stock in godown: ₹
On 1.4.2012 30,000
On 31.3.2013 25,000
Overdue Installments
On 1.4.2012 2,000
On 31.3.2013 3,000
Goods with Customers on Hire-Purchase:
On 1.4.2012 36,000
Purchases 64,600
Installments received 60,000 (ICWA (Inter))
Answer :
In the Books of the Trader
Dr. HIRE-PURCHASE STOCK ACCOUNT Cr.
Date Particulars Invoice Cost Date Particulars Invoice Cost
Rs. Rs. Rs. Rs.
1.4.12 To Balance b/d 36,000 28,800 31.3.13 By H.P. Debtors A/c
31.3.13 To Shop Stock A/c (Installment due) 61,000 61,000
(goods sent)

On Hire-Purchase To 87,000 69,600 By Balance c/d 62,000 49,600

Gross profit 12,200 (Balancing fig)

To Balance b/d 1,23,000 1,10,600 1,23,000 1,10,600

1.4.13 62,000 49,600

Dr. SHOP STOCK ACCOUNT Cr

Date Particulars Amount Date Particulars Amount
1.4.12 To Balance b/d Rs. 31.3.13 By H.P Stock A/c Rs. 69,600
31.3.13 To Purchases 30,000 (Cost of Goods sent on H.P.)
64,600 (Balancing figure)
By Balance c/d 25,000
1.4.13 To Balance c/d 94,600 94,600
25,000

Dr HIRE-PURCHASE DEBTORS ACCOUNT Cr.

Date Particulars Amount Date Particulars Amount
Rs. Rs.
1.4.12 To Opening balance b/d 2,000 31.3.13 By Bank- 60,000
Installment Received
31.3.13 To H.P. Stock A/c (Installment 61,000 By Closing balance c/d 3,000
due) (Balancing figure)

63,000 63,000

Question 32. X sells goods at hire-purchase system , The price being cost plus 50%. From the following calculate
missing figure and then prepare hire-purchase trading account:
2021 ₹
Jan. 1 Stock at the shop at cost price 36,000
Installments due 10,000
Dec. 31 Cash received from customers 1,20,000
Goods repossessed (Installment due ₹4,000) as valued 1,200
Installments due at the end 18,000
Stock at the shop at cost 40,000
Installments unpaid and not due 60,000
Purchases made during the year 1,20,000

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Question 33. From the following information extracted from the books of Excellent Finance Private Limited Prepare
Hire-Purchase Trading account for the year ended 31-3-1991, showing the profit in respect of the hire-purchase
business of the company:
(i) shop stock was nil and Installments due but not received on 1-4-1990 - ₹60,000.
(ii) Installments due but not received on 31-3-1991 - ₹1,00,000.
(iii)Cash received during the financial year 1990 by way of a hire-purchase Installments ₹80,00,000.
(iv) Value of Stock 'out' on hire-purchase as at 1-4-1990 at H.P. price (loading 20% above cost) ₹2,40,000.
(v) (a) Cost price of truck 'out' on hire-purchase as at 31-3-1991, ₹40,00,000.
(b) Total amount of installments receivable in respect of (v) (a) above ₹48,00,000.
(c) Total amount of installments received and due up to 31 -3-1991 in respect of ( v)(a) above ₹36,00,000.
(vi) Purchase of trucks during the financial year 1990-91 ₹80,00,000.
(vii) Sale of trucks otherwise than on H.P. (at a profit of 6.25% of cost thereof), ₹8,50,000.
(viii) Body building charges in respect of truck, sold on H.P. ₹4,00,000.
(ix) Interest paid was ₹80,000 and unsold trucks on 31 -3-1991 at cost price were ₹1,60,000
(Hire-purchase price ₹1,92,000).
(C.A. (Inter) May, 1991)(modified)
Answer : profit 13,20,000.

Question.34 Welwash (Pvt.) Ltd. sells washing machines for outright cash as well as on hire purchase basis. The cost of
a washing machine to the company is ₹10,500. The company has fixed cash price of the machine at ₹12,300 and hire
purchase price at ₹13,500 payable as to ₹1,500 down and the balance in 24 equal monthly installments of ₹500 each.
st
On 1 April, 2020 the company had 26 washing machines laying in its showroom. On that date 3 installments had fallen due,
but not yet received and 675 installments were yet to fall due in respect of machines lying with the hire purchase customers.
st
During the year ended 31 March, 2021 the company sold 130 machines on cash basis and 80 machines on hire purchase
basis. After paying five monthly installments, one customer failed to pay subsequent installments and the company has to
repossess the washing machine. After spending ₹1,000 on it, The company resold it for 11,500.
st
On 31 March, 2021 there were 21 washing machines in stock, 810 installments were yet to fall due and 5 installments had
fallen due, but not yet received in respect of washing machines lying with the hire-purchase customers. Total selling expenses
and office expenses including depreciation on fixed assets totaled ₹2,60,000 for the year.
st
You are required to prepare for the accounting year ended 31 March, 2021:
(i) Hire-purchase Trading Account, and
(ii) Trading and Profit and Loss Account showing net profit earned by the company after making provision for Income-tax @
35%. ( Nov 2001—16 marks)

Question.35 Omega Corporation sells computers on hire purchase basis at cost plus25%. Terms of sales are ₹10,000 as
down payment and 8 monthly installment of ₹ 5,000 for each computer. From the following particulars prepare Hire-
purchase Trading Account for the year 2021.
st
As on 1 January, 2021 last Installment on 30 computers was outstanding as these were not due up to the end of the
st
previous year. During 2021 the firm sold 240 computers. As on 31 Dec, 2021 the position of installments outstanding
were as under:
Installment due but not collected:
Two installments on 2 computers and last installment on 6 computers
Installments not yet due;
8 installments on 50 Computers, 6 installments on 30 and last installment on 20 Computers.

Two computers on which 6 installments were due and one installment not yet due on 31.12.21 had to be repossessed.
Repossessed stock is valued at 50% of cost.
All other installments have been received. [May -2000—10 marks]

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Answer:
Hire Purchase Trading Account
st
for the year ended on 31 Dec.,2021
Dr. Cr
Rs. Rs. Rs.
To Hire Purchase Stock By Hire Purchase
(30×Rs. 5,000) 1,50,000 Sales (W.N. 2) 91,40,000
To Goods Sold on By Stock Reserve
Hire Purchase (Rs. 1,50,000×20%) 30,000
(240×Rs. 50,000) 1,20,00,000
To Bad Debts 12,000 By Goods sold on
Hire Purchase
To Loss on Re- (Rs. 1,20,00,000× 20%) 24,00,000
possession 16,000 By Hire Purchase Stock
Less : Installments [(8×50+6×30+1×20)× 30,00,000
not yet due 8,000 8,000 Rs. 5,000]
To Stock Reserve 6,00,000
(30,00,000 ×20%)

To Profit & Loss A/c

(Transfer of Profit) 18,00,000

1,45,70,000 1,45,70,000

Alternatively, hire purchase trading account can be prepared in the following manner:

Hire Purchase Trading Account

st
for the year ended on 31 Dec., 2021
Rs. Rs.
To Hire Purchase Stock By Cash (W.N.1)
90,30,000
(30×Rs. 5,000) 1,50,000 By Stock Reserve
To Goods Sold on Hire (Rs. 1,50,000×20%) 30,000
Purchase By Goods Sold on Hire
(240×Rs. 50,000) 1,20,00,000 Purchase
To Stock Reserve (Rs. 24,00,000
(Rs. 30,00,000 × 6,00,000 1,20,00,000×20%)
20%) By Goods Repossessed
To Profit & Loss A/c (2×Rs. 40,000×50%) 40,000
(Transfer of Profit) 18,00,000 By Installments Due
[(2×2+1×6)×Rs. 50,000
5,000]
By Hire Purchase Stock

[8×50+6×30+1×20)×Rs. 30,00,000
5,000]
1,45,50,000 1,45,50,000
Working Notes :
Rs.
(1) Cash collected:
Cash down payment (240 × Rs. 10,000) 24,00,000
Add : Installments collected :
Last installments on 30 computers outstanding on 1.4.99 1,50,000
Installments due and collected on 240 computers sold
during the year :
Total installments on 240 computers
(8 × 240 × Rs. 5,000) 96,00,000
Less : Installments due but not collected
[(2 × 2 + 1 × 6 + 6 × 2) × Rs. 5,000] 1,10,000
COCEDUCATION.COM Ph. No. 9999631597, 7303445575, 8448322142
COCEDUCATION.COM HIRE PURCHASE CA/CMA SANTOSH KUMAR
Installments not due on 31.12.99
[(8 × 50 + 6 × 30 + 1 × 20 +
1 × 2) × Rs. 5,000] 30,10,000 31,20,000 64,80,000
90,30,000
(2) Hire purchase sales:
Cash collected 90,30,000
Add : Installments due but not collected
[(2 × 2 + 1 × 6 + 6 × 2) × Rs. 5,000] 1,10,000
91,40,000
(3) Loss on repossessed computers:
Cost of installments due but not collected
(6 × 2 × Rs. 4,000) 48,000
Cost of Installments not yet due
(1 × 2 × Rs. 4,000) 8,000
56,000
Less : Estimated value of repossessed computers
(2 × Rs. 40,000 × 50%) 40,000
Loss 16,000
(4) Bad debts (in respect of repossessed computers):
Installments due but not collected
(6 × 2 × Rs. 5,000) 60,000
Cost of installments not due on 31.12.99
(1 × 2 × Rs. 5,000 × 80%) 8,000
68,000
Less : Cost of installments due but not collected
(6 × 2 × Rs. 4,000) 48,000
Cost of instalments not yet due
(1 × 2 × Rs. 4,000) 8,000 56,000
Bad debts 12,000

COCEDUCATION.COM Ph. No. 9999631597, 7303445575, 8448322142

 Experienced Faculties, Daily Doubt sessions,
Ready to counsel any query, Supportive
Technical Team

COC Education goal is to provide conceptual knowledge to all or any commerce

students instead of mugging up books. Video classes are provided for
CA/CMA/CS/B.Com-M.Com Class XI-XII(Commerce) students in Pen-Drive/SD
card/Download link mode which may run on Windows 7 & above laptop/computer
or android phone.

We promise you that, if we see you bringing one step forward then we'll take you to
level up by our support and care in getting the concepts clear for once and all.

OUR ROOTS: COC Education Pvt. Ltd. (COC Education)

In 2006, CA/CMA Santosh Kumar started an educational institute after

leaving his well-paying corporate job with mission to solve problem of
quality education to student preparing for CA, CS and CMA. With the
commitment to excellence, in less than a decade time - 4 institutes were
opened in different corners of Delhi and we provided education to more
than 45,000 students. But the vision was bigger, to provide the same
quality of education at reasonable price to all commerce students
throughout the world.

And then the revolution in video classes started and COC Education was
formed. With the virtue of excellent teaching methodology and the team
with dedication and devotion toward student success in every challenge
we reached to 245k+ students online and more than 50,000 students
have enrolled with us in different courses in the span of just 3 years.

Website: -www.coceducation.com Enquiry. No. 9999631597/8448322142/7303445575

We have the vision to become global leader in providing exemplary
education for betterment of individual. We have evolved, developed and
implemented strategies to be the pioneer in every stage.

Our Video Lectures edge over market:

1. Unlimited Views till exam

2. Best Quality Video
3. Study Material, Past attempts(s) questions, and questions
from practice manual
4. Better understanding of the students all the lectures are
given in simple and understandable language.
5. Covers the entire study material, past attempts(s) questions,
and questions from practice manual
6. Fortnight Live Interactive Session with Faculties
CONTACT US:
• For any Purchases Inquiry- Call/WhatsApp - 8448322142,
9999631597, 7303445575
• For any Purchase Inquiry Mail, us @
enquiry.coceducation@gmail.com
• For Technical Support- 9811455109, 9354257700, 9311281468
• For Technical Support- Mail us @ coceducation.technical@gmail.com
• For Management – E-Mail @ official@coceducation.com

Address:

COC Education Pvt. Ltd.

1201, Tower B, I-Thum, Sector 62,

Noida Pin code- 201309

Website:- www.coceducation.com Enquiry No. 9999631597/8448322142/7303445575