On 1 January 2015 J McFarlane bought a computer (cash price 2,092) from Pear Ltd on the

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On 1 January 2015 J McFarlane bought a computer (cash price £2,092) from Pear Ltd on the following hire purchase terms. McFarlane was to make an immediate payment of £600 and three annual payments of £600 on 31 December in each year. The rate of interest chargeable is 10% per annum on the balance at the start of the year.

J McFarlane depreciates this computer by 40% reducing balance each year.
(a) Make the entries relating to this computer in McFarlane’s ledger for the years 2015, 2016 and 2017. (All calculations are to be made to the nearest £.)
(b) Show how the item ‘computer’ would appear in the statement of financial position as at 31 December 2015.

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