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D Ltd. has purchase a machinery on hire purchase system from hind machinery Ltd., the cash price being rs. 75,000. the terms are that they would pay rs. 20,000 down on 1-4-2010 and 5 annual instalments of rs. 11,000 each commencing from 1-4-2011 with 5 percent internet per annum. they charged depreciation on machinery at the rate of 10 percent per annum under diminishing balance system. Show the necessary ledger accounts in the books of D Ltd. Accounting year of D. Ltd. ends on 31st march in each year.
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D Ltd. has purchase a machinery on hire purchase system from hind mach...
Ledger Accounts in the Books of D Ltd. for Hire Purchase of Machinery

1. Machinery Account
Date Particulars L.F. Amount (Rs.) Balance (Rs.)
1-4-2010 To Hind Machinery Ltd. 20,000 55,000
1-4-2011 To Interest on HP Installment 2,750 57,750
1-4-2011 By HP Installment 11,000 46,750
31-3-2012 By Depreciation 4,675 42,075
1-4-2012 To Interest on HP Installment 2,104 44,179
1-4-2012 By HP Installment 11,000 33,179
31-3-2013 By Depreciation 3,318 29,861
1-4-2013 To Interest on HP Installment 1,493 31,354
1-4-2013 By HP Installment 11,000 20,354
31-3-2014 By Depreciation 2,035 18,319
1-4-2014 To Interest on HP Installment 916 19,235
1-4-2014 By HP Installment 11,000 8,235
31-3-2015 By Depreciation 823 7,412
1-4-2015 To Interest on HP Installment 371 7,783
1-4-2015 By HP Installment 11,000 0

2. Interest on HP Installment Account
Date Particulars L.F. Amount (Rs.) Balance (Rs.)
1-4-2011 To Machinery Account 2,750 2,750
31-3-2012 By Machinery Account 2,104 4,854
1-4-2012 To Machinery Account 2,104 6,958
31-3-2013 By Machinery Account 1,493 8,451
1-4-2013 To Machinery Account 1,493 9,944
31-3-2014 By Machinery Account 916 10,860
1-4-2014 To Machinery Account 916 11,776
31-3-2015 By Machinery Account 371 12,147

3. Hind Machinery Ltd. Account
Date Particulars L.F. Amount (Rs.) Balance (Rs.)
1-4-2010 To D Ltd. 20,000 20,000
1-4-2011 By D Ltd. 11,000 9,000
31-3-2012 By D Ltd. 11,000 0

Explanation:

Hire purchase is a system in which an asset is purchased on credit from the seller, and the buyer makes regular payments (instalments) to the seller over a period of time. The buyer has the right to use the asset during the payment period but does
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D Ltd. has purchase a machinery on hire purchase system from hind mach...
This question hire purchase price is 72250 and its annual intrest is to be 550
and depreciation is 7225
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D Ltd. has purchase a machinery on hire purchase system from hind machinery Ltd., the cash price being rs. 75,000. the terms are that they would pay rs. 20,000 down on 1-4-2010 and 5 annual instalments of rs. 11,000 each commencing from 1-4-2011 with 5 percent internet per annum. they charged depreciation on machinery at the rate of 10 percent per annum under diminishing balance system. Show the necessary ledger accounts in the books of D Ltd. Accounting year of D. Ltd. ends on 31st march in each year. Related: 2 1 Hire Purchase?
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