Question

journal entry pass in installment system​

Answer 1

Answer:

Installment System: Journal Entries in Books of Purchase and Vendor!

In installment system, there is an immediate sale, in which the price, instead of being paid in one lump sum, is spread over a period, interest being charged on unpaid balances. Under this system, the property in goods is passed on immediately to the buyer on signing the contract. The seller gives up the possession of the goods. If the buyer makes default in payment of instalment, the seller cannot repossess the goods but he can sue for the balance of debt.

Explanation:

(1) Under hire purchase system, ownership of goods is transferred to the buyer after the pay­ment of last instalment whereas under instalment the ownership passes to the buyer at once on deliv­ery.

(2) Under hire purchase, it is similar to a contract of hire but later it becomes a sale, whereas under instalment system it is a sale from the very beginning.

(3) Under hire purchase, if the buyer makes default the seller has a right to take back the goods whereas under instalment the seller cannot take back the goods.

(4) Under hire purchase system, the buyer cannot sell, destroy or transfer the goods whereas under instalment buyer can do as he wishes.

(5) Hire purchaser is just like a bailee but under instalment the buyer is the owner.