Q 2. Dinesh Ltd. On 1st April 2015, purchased a machine from Rajesh Ltd. On hire purchase
basis. The cash price of the machine was Rs 25,000. The payment was to be made Rs 5000 on
the date of the contract and the balance in four annual instalments of Rs. 5000 each plus interest
at 5% per annum payable on December 31s each year, and the first such instalment being
payable on 31.12.2015. Depreciation is to be charged @ 10% on original cost.
Show the journal entries and ledger accounts in the books of both the parties.
Answers
Answer
✅The amount of total interest
= Rs 2,500,
✅ balance of Machinery
A/c on 1.1.19 = Rs. 15,000.
Answer:
Explanation:
Machinery A/c
To Rajesh ltd 25000 By Depreciation 1875
By bal c/d 23125
To bal b/d 23125 By Dep a/c 2500
By bal c/d 20625
To bal b/d 20625 By Dep a/c 2500
By bal c/d 18125
To bal b/d 18125 By dep a/c 2500
By bal c/d 15625
------------- -------------
18125 18125
Rajesh Ltd Account
To Bank A/c 5000 By machinery A/c 25000
To Bank A/c 5750 By Interest a/c 750
To bal c/d 15000
-------------- ------------------
25750 25750
To Bank a/c 5750 By bal b/d 15000
To bal c/d 10000 By interest 750
---------------- ------------------
15750 15750
To bank a/c 5500 By bal b/d 10000
To bal c/d 5000 By interest 500
------------------ ------------------
10500 10500
To Bank a/c 5250 By bal b/d 5000
By interest 250
------------------------ -----------------------
5250 5250