1. Raja purchased an asset under hire purchase system for ` 60,000 payments to be made Rs. 15,000 down and three installments of Rs. 18,000 each at the end of each year. Rate of interest is 10% p.a. Raja depreciates asset @ 10% p.a. on diminishing balance method.
Due to financial difficulties Raja could not pay any installment after first installment and selling company took possession of the asset. The selling company after spending Rs.1,500 on repairs it sold away the asset for Rs.38,000. Prepare necessary ledger accounts in the books of both the parties
Answers
The net income reported on the income statement for the year was Rs.1,10,000 and depreciation of fixed assets for the year was Rs.44,000. The balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
End of the Year (Rs.) Beginning of the Year ( Rs.) Cash Debtors Inventories
Prepaid Expenses Accounts Payable 1,30,000
2,00,000
2,90,000
15,000
1,02,000
1,40,000
1,80,000
3,00,000
16,000
1,16,000
Calculate total cash from operation activities.
(b) From the following particulars, you are required to calculate : (i) Current Ratio (ii) Net Profit Ratio (iii) Gross Profit Ratio Net Sales : Rs.1,40,000; Gross Profit :Rs.10,000; Net Profit :Rs.6,000; B/R : Rs.2000 ;
Debtors:Rs.8,000; Stock: Rs.10,000; Cash: Rs.6000; Creditors:Rs.12,000; B/P:Rs.8,800company had a balance of Rs.4,0,5000 on 1stJanuary ,2018 in its machinery account ,10% per annum depreciation was charged by diminishing balance method .On the 1st July ,2018 the company sold a part of the machinery for Rs.87,500 ( which was purchased on 1st January ,2016 for Rs.1,20,000) and on the same date , the company purchased a new machinery for Rs.2,50,000 .On 31st December ,2018 the directors of the company decided to adopt the fixed instalment method of depreciation as per AS-10( Revised) instead of diminishing balance method; the rate of depreciation remaining the same. remember that I am a science student so that sorry heehe.Prepare Machinery Account in the books of the company for the year ended ,2018.