Question

What entries are made in the books of the buyer and seller when goods are sold on Hire - purchase System.​

Answer 1

Answer:

I don't know anything about it

Answer 2

The HP system is a special system for the purchasing and selling of products, where the price of the goods is paid in parts by the buyer.

• Various entries are -

1. Hire Purchaser  A/c Dr.

To Hire Sales  A/c

(Being the entry for sales under hire purchase system)

2. Bank  A/c Dr.

To Hire Purchaser A/c

(Being the payment of down payment)

3. Hire Purchaser  A/c Dr.

To Interest  A/c

(Being interest due on unpaid balance)

4. Bank  A/c Dr.

To Hire Purchaser A/c

(Being amount of part received)

5. Interest  A/c Dr.

To P&L A/c

(Being transfer of interest)

6. Hire Sales A/c Dr.

To Trading A/c

(Being hire sales transferred to Trading Account)