Question

1. X purchased a machinery on 1st April,2010 on Hire Purchase System from ‘Y’. Cash price of the machine was Rs.1,11,697 and the payment was to be made as follows: Rs.30,000 was to be paid on signing of the agreement and the balance in three instalments of Rs.30,000 each at the end of each year. 5% interest is charged by the seller per annum. X has decided to write off 10% depreciation yearly on the diminishing balance. Prepare calculation table for periodic interest, pass necessary journal entries and Hire Vendors’ A/c in the books of X.

Answer 1

Answer:

I have attached the interest calculation.