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Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.?
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Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, unde...
Transport Corporation Ltd's Account in the Books of Roadmasters Ltd.
Particulars | Amount (Rs.) | Particulars | Amount (Rs.)
--- | --- | --- | ---
Hire-Purchase Receivable A/C | 20,000 | To Motor Lorry A/C | 20,000
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Cash A/C | 8,660 | To Interest on HP Receivable A/C | 8,660
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HP Receivable A/C | 8,660 | To Cash A/C | 8,660
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Cash A/C | 8,660 | To Interest on HP Receivable A/C | 8,660
| | |
HP Receivable A/C | 8,660 | To Cash A/C | 8,660
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Cash A/C | 8,660 | To Interest on HP Receivable A/C | 8,660
| | |
HP Receivable A/C | 8,660 | To Cash A/C | 8,660
Explanation:
The above table shows the Transport Corporation Ltd's account in the books of Roadmasters Ltd. The following points explain the entries made in the account:
- Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd under a hire-purchase agreement.
- Transport Corporation Ltd agreed to pay Rs. 20,000 at the time of signing the agreement on 1st January 2015 and Rs. 20,000 annually on 1st January for three years, which includes an interest chargeable at 5%.
- The present value of Re. 1 per annum for five years at 5% is 4.33.
- As per the agreement, Transport Corporation Ltd paid Rs. 20,000 at the time of signing the agreement, which was credited to the Hire-Purchase Receivable A/C and debited to the Motor Lorry A/C.
- The interest on the hire-purchase receivable for the first year was calculated as Rs. 20,000 * 5% = Rs. 1,000. The present value of this amount for five years at 5% is Rs. 4,330. Hence, Transport Corporation Ltd paid Rs. 8,660 (Rs. 4,330 * 2) towards the interest for the first year, which was credited to the Interest on HP Receivable A/C and debited to the Cash A/C.
- Similarly, the interest on the hire-purchase receivable for the second and third year was calculated as Rs. 20,000 * 5% = Rs. 1,000. The present value of this amount for four years at 5% is Rs. 3,993. Hence, Transport Corporation Ltd paid Rs. 8,660 (Rs. 3,993 * 2.17) towards the interest for the second and third year, which was credited to the Interest on HP Receivable A/C and debited to the Cash A/C.
- Finally, the last installment of Rs. 20,000 paid by Transport Corporation Ltd on 1st January 2018 was credited to the Hire-Purchase Receivable A/C and debited to the Cash A/C, thereby completing the transaction.
Particulars | Amount (Rs.) | Particulars | Amount (Rs.)
--- | --- | --- | ---
Hire-Purchase Receivable A/C | 20,000 | To Motor Lorry A/C | 20,000
| | |
Cash A/C | 8,660 | To Interest on HP Receivable A/C | 8,660
| | |
HP Receivable A/C | 8,660 | To Cash A/C | 8,660
| | |
Cash A/C | 8,660 | To Interest on HP Receivable A/C | 8,660
| | |
HP Receivable A/C | 8,660 | To Cash A/C | 8,660
| | |
Cash A/C | 8,660 | To Interest on HP Receivable A/C | 8,660
| | |
HP Receivable A/C | 8,660 | To Cash A/C | 8,660
Explanation:
The above table shows the Transport Corporation Ltd's account in the books of Roadmasters Ltd. The following points explain the entries made in the account:
- Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd under a hire-purchase agreement.
- Transport Corporation Ltd agreed to pay Rs. 20,000 at the time of signing the agreement on 1st January 2015 and Rs. 20,000 annually on 1st January for three years, which includes an interest chargeable at 5%.
- The present value of Re. 1 per annum for five years at 5% is 4.33.
- As per the agreement, Transport Corporation Ltd paid Rs. 20,000 at the time of signing the agreement, which was credited to the Hire-Purchase Receivable A/C and debited to the Motor Lorry A/C.
- The interest on the hire-purchase receivable for the first year was calculated as Rs. 20,000 * 5% = Rs. 1,000. The present value of this amount for five years at 5% is Rs. 4,330. Hence, Transport Corporation Ltd paid Rs. 8,660 (Rs. 4,330 * 2) towards the interest for the first year, which was credited to the Interest on HP Receivable A/C and debited to the Cash A/C.
- Similarly, the interest on the hire-purchase receivable for the second and third year was calculated as Rs. 20,000 * 5% = Rs. 1,000. The present value of this amount for four years at 5% is Rs. 3,993. Hence, Transport Corporation Ltd paid Rs. 8,660 (Rs. 3,993 * 2.17) towards the interest for the second and third year, which was credited to the Interest on HP Receivable A/C and debited to the Cash A/C.
- Finally, the last installment of Rs. 20,000 paid by Transport Corporation Ltd on 1st January 2018 was credited to the Hire-Purchase Receivable A/C and debited to the Cash A/C, thereby completing the transaction.
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Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.?
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Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.?.
Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.?.
Solutions for Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.? in English & in Hindi are available as part of our courses for B Com.
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ample number of questions to practice Roadmasters Ltd. sold a motor lorry to Transport Corporation Ltd, under a hire-purchase agreement. Terms:20,000 be signing the agreement 1st January, 2015 and 20,000 in annual payments thereafter on 1st January for three years. The annual payments included the interest chargeable at 5 per cent. Present value of Re. I per annum for five years at 5 per cent is 4.33. Show the Transport Corporation Lid's Account in the books of Roadmaster Ltd.? tests, examples and also practice B Com tests.
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