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‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X?
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‘X’ purchased a machine on hire purchased system. The total cash price...
Ledger Accounts in the Books of 'X'
1. Machinery Account
Dr. Machinery Account Cr.
Date Particulars Amount Date Particulars Amount
(To record the purchase of machinery on hire purchase system)
- Machinery purchased 31,960
- Cash paid (down payment) 8,000
- Bank loan (balance amount) 23,960
(To record the depreciation on machinery for three years)
- Depreciation expense 3,196 - Accumulated depreciation 3,196
(To record the final payment and complete the hire purchase agreement)
- Bank loan (final payment) 19,764 - Installment paid 19,764
2. Depreciation Expense Account
Dr. Depreciation Expense Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (10% of cash price) 3,196
3. Accumulated Depreciation Account
Dr. Accumulated Depreciation Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (depreciation expense) 3,196
4. Cash Account
Dr. Cash Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (down payment) 8,000 - Bank loan (final payment) 19,764
5. Bank Loan Account
Dr. Bank Loan Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (balance amount) 23,960 - Cash (final payment) 19,764
Explanation:
1. The Machinery Account is used to record the purchase of the machine on the hire purchase system. The total cash price of the machine is `31,960, out of which `8,000 is paid as a down payment and the remaining `23,960 is taken as a bank loan. The depreciation on the machinery is also recorded in this account. The depreciation expense is calculated at 10% of the cash price and is spread over three years. The final payment of `19,764 is also recorded in this account to complete the hire purchase agreement.
2. The Depreciation Expense Account is used to record the depreciation on the machinery. The depreciation expense is calculated at 10% of the cash price and is spread over three years. The total depreciation expense is `3,196.
3. The Accumulated Depreciation Account is used to accumulate the depreciation expense over the years. The total accumulated depreciation is `3,196.
4. The Cash Account is used to record the cash transactions related to the machinery. The down payment of `8,000 is recorded as a debit, and the final payment of `19,764 is recorded as a credit.
5. The Bank Loan Account is used to record the bank loan taken for the purchase of the machinery. The balance amount of `23,960 is recorded as a debit, and the final payment of `19,764 is
1. Machinery Account
Dr. Machinery Account Cr.
Date Particulars Amount Date Particulars Amount
(To record the purchase of machinery on hire purchase system)
- Machinery purchased 31,960
- Cash paid (down payment) 8,000
- Bank loan (balance amount) 23,960
(To record the depreciation on machinery for three years)
- Depreciation expense 3,196 - Accumulated depreciation 3,196
(To record the final payment and complete the hire purchase agreement)
- Bank loan (final payment) 19,764 - Installment paid 19,764
2. Depreciation Expense Account
Dr. Depreciation Expense Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (10% of cash price) 3,196
3. Accumulated Depreciation Account
Dr. Accumulated Depreciation Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (depreciation expense) 3,196
4. Cash Account
Dr. Cash Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (down payment) 8,000 - Bank loan (final payment) 19,764
5. Bank Loan Account
Dr. Bank Loan Account Cr.
Date Particulars Amount Date Particulars Amount
- Machinery (balance amount) 23,960 - Cash (final payment) 19,764
Explanation:
1. The Machinery Account is used to record the purchase of the machine on the hire purchase system. The total cash price of the machine is `31,960, out of which `8,000 is paid as a down payment and the remaining `23,960 is taken as a bank loan. The depreciation on the machinery is also recorded in this account. The depreciation expense is calculated at 10% of the cash price and is spread over three years. The final payment of `19,764 is also recorded in this account to complete the hire purchase agreement.
2. The Depreciation Expense Account is used to record the depreciation on the machinery. The depreciation expense is calculated at 10% of the cash price and is spread over three years. The total depreciation expense is `3,196.
3. The Accumulated Depreciation Account is used to accumulate the depreciation expense over the years. The total accumulated depreciation is `3,196.
4. The Cash Account is used to record the cash transactions related to the machinery. The down payment of `8,000 is recorded as a debit, and the final payment of `19,764 is recorded as a credit.
5. The Bank Loan Account is used to record the bank loan taken for the purchase of the machinery. The balance amount of `23,960 is recorded as a debit, and the final payment of `19,764 is
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‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X?
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‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X? 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 ‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X?.
‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X? 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 ‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for ‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X?.
Solutions for ‘X’ purchased a machine on hire purchased system. The total cash price of the machine is `31,960. Down payment `8,000 and three installments of `12,000, `10,000, `4,000 payable at the end of the first, second and third years respectively. Interest is charged 5% p.a. Charge depreciation at 10% on straight line method. Prepare ledger accounts in the books of ‘X? in English & in Hindi are available as part of our courses for B Com.
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