X Ltd purchased machinery on hire purchase system from Y Ltd on 1st January, 2016. The terms
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X Ltd purchased machinery on hire purchase system from Y Ltd on 1st January, 2016. The terms were that X Ltd would pay ₹20,000 down on signing the contract and 4 instalments of ₹11,000 each commencing from the beginning of the next year. X Ltd charged depreciation at the rate of 10% per annum on cost under diminishing balance system. Y Ltd charged interest at the rate of 10% per annum in their hire purchase contract. Prepare Machinery Account and Y Ltd Account for 5 years in the books of X Ltd.
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Year 1 Date Account Description Debit Credit 1st Jan 2016 Machinery Purchas...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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