On 1 January 2016, Carver bought a machine costing £20,000 on hire purchase. He paid a deposit of £6,000 on 1 January 2016 and he also agreed to pay two annual instalments of £5,828 on 31 December in each year, and a final instalment of £5,831 on 31 December 2018.
The implied rate of interest in the agreement was 12%. This rate of interest is to be applied to the amount outstanding in the hire purchase loan account as at the beginning of the year.
The machine is to be depreciated on a straight line basis over five years on the assumption that the machine will have no residual value at the end of that time.

Required:
(a) Write up the following accounts for each of the three years to 31 December 2016, 2017 and 2018 respectively:
(i) Machine account;
(ii) Accumulated depreciation on machine account; and
(iii) Hire purchase loan account.
(b) Show the statement of financial position extracts for the year as at 31 December 2016, 2017 and 2018 respectively for the following items:
(i) Machine at cost;
(ii) Accumulated depreciation on the machine;
(iii) Non-current liabilities: obligations under hire purchase contract; and
(iv) Current liabilities: obligations under hire purchase contract.