On January 1, 2016, Sharda purchased a machine from Kusum on a hire-purchase basis. The particulars are
Question:
On January 1, 2016, Sharda purchased a machine from Kusum on a hire-purchase basis. The particulars are as follows:
(a) Cash price ₹10,000.
(b) ₹4,000 to be paid on signing the contract.
(c) Balance in three instalments of ₹2,000 plus interest.
(d) Interest charged on outstanding balance at 5%.
(e) Depreciation at 5% p.a. on the Straight-line Method. Give Journal Entries and the necessary Ledger Accounts for the year ended on 31st December, 2016, 2017 and 2018 in the books of both the parties.
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Step by Step Answer:
To account for this hirepurchase transaction between Sharda and Kusum we need to make journal entries and maintain ledger accounts for both parties fo...View the full answer
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Related Book For 
Financial Accounting Volume II
ISBN: 9789387886230
4th Edition
Authors: Mohamed Hanif, Amitabha Mukherjee
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