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Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method?
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Mr. Gupta purchased machinery under hire-purchase arrangement from Mr....
Ledger Accounts in the Books of Both Parties
1. Ledger Account in Mr. Gupta's Books
Date Particulars L.F. Amount (₹) Date Particulars L.F. Amount (₹)
Hire-Purchase Machinery A/c Dr. To Cash A/c (Purchase of Machinery) 15,500.00 On signing the agreement 73,000.00
Hire-Purchase Interest A/c Dr. To Cash A/c (Interest Payment) 9,194.50 First year end 5,000.00
Hire-Purchase Interest A/c Dr. To Cash A/c (Interest Payment) 5,328.68 Second year end 5,000.00
Hire-Purchase Interest A/c Dr. To Cash A/c (Interest Payment) 2,899.44 Third year end 5,000.00
Depreciation A/c Dr. To Hire-Purchase Machinery A/c (Depreciation Charged) 1,550.00 Yearly
2. Ledger Account in Mr. Pick's Books
Date Particulars L.F. Amount (₹) Date Particulars L.F. Amount (₹)
Hire-Purchase Receivable A/c Dr. To Machinery Sales A/c (Sale of Machinery) 15,500.00 On signing the agreement 73,000.00
Cash A/c Dr. To Hire-Purchase Receivable A/c (Payment Received) 15,500.00 On signing the agreement 73,000.00
Cash A/c Dr. To Hire-Purchase Interest Receivable A/c (Interest Received) 9,194.50 First year end 5,000.00
Cash A/c Dr. To Hire-Purchase Interest Receivable A/c (Interest Received) 5,328.68 Second year end 5,000.00
Cash A/c Dr. To Hire-Purchase Interest Receivable A/c (Interest Received) 2,899.44 Third year end 5,000.00
Depreciation Charged
1. Calculation of Depreciation Charged
Year Depreciation Rate Depreciation Amount (₹)
1 10% 1,550.00
2 10% 1,395.00
3 10% 1,255.50
2. Explanation of Depreciation Charged
- Depreciation is the reduction in the value of an asset over time due to wear and tear, obsolescence or other factors.
- In this case, Mr. Gupta is charging depreciation @10% on the diminishing balance method, which means that depreciation is charged on the reducing balance of the machinery.
- The diminishing balance method is a more accelerated method of depreciation as compared to the straight-line method, as the depreciation charge reduces each year.
- In the first year, Mr. Gupta charges depreciation @10% on the original cost of the machinery, which comes to ₹1,550.
- In the second year, he charges depreciation @10% on the reduced balance of ₹15,500 - ₹1,550 = ₹13,950, which comes to ₹1,395.
- In the third year, he charges depreciation @10% on the reduced balance of ₹13,950 - ₹1,395 = ₹12,555, which comes to ₹1,255.50.
1. Ledger Account in Mr. Gupta's Books
Date Particulars L.F. Amount (₹) Date Particulars L.F. Amount (₹)
Hire-Purchase Machinery A/c Dr. To Cash A/c (Purchase of Machinery) 15,500.00 On signing the agreement 73,000.00
Hire-Purchase Interest A/c Dr. To Cash A/c (Interest Payment) 9,194.50 First year end 5,000.00
Hire-Purchase Interest A/c Dr. To Cash A/c (Interest Payment) 5,328.68 Second year end 5,000.00
Hire-Purchase Interest A/c Dr. To Cash A/c (Interest Payment) 2,899.44 Third year end 5,000.00
Depreciation A/c Dr. To Hire-Purchase Machinery A/c (Depreciation Charged) 1,550.00 Yearly
2. Ledger Account in Mr. Pick's Books
Date Particulars L.F. Amount (₹) Date Particulars L.F. Amount (₹)
Hire-Purchase Receivable A/c Dr. To Machinery Sales A/c (Sale of Machinery) 15,500.00 On signing the agreement 73,000.00
Cash A/c Dr. To Hire-Purchase Receivable A/c (Payment Received) 15,500.00 On signing the agreement 73,000.00
Cash A/c Dr. To Hire-Purchase Interest Receivable A/c (Interest Received) 9,194.50 First year end 5,000.00
Cash A/c Dr. To Hire-Purchase Interest Receivable A/c (Interest Received) 5,328.68 Second year end 5,000.00
Cash A/c Dr. To Hire-Purchase Interest Receivable A/c (Interest Received) 2,899.44 Third year end 5,000.00
Depreciation Charged
1. Calculation of Depreciation Charged
Year Depreciation Rate Depreciation Amount (₹)
1 10% 1,550.00
2 10% 1,395.00
3 10% 1,255.50
2. Explanation of Depreciation Charged
- Depreciation is the reduction in the value of an asset over time due to wear and tear, obsolescence or other factors.
- In this case, Mr. Gupta is charging depreciation @10% on the diminishing balance method, which means that depreciation is charged on the reducing balance of the machinery.
- The diminishing balance method is a more accelerated method of depreciation as compared to the straight-line method, as the depreciation charge reduces each year.
- In the first year, Mr. Gupta charges depreciation @10% on the original cost of the machinery, which comes to ₹1,550.
- In the second year, he charges depreciation @10% on the reduced balance of ₹15,500 - ₹1,550 = ₹13,950, which comes to ₹1,395.
- In the third year, he charges depreciation @10% on the reduced balance of ₹13,950 - ₹1,395 = ₹12,555, which comes to ₹1,255.50.
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Mr. Gupta purchased machinery under hire-purchase arrangement from Mr....
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Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method?
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Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method? 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 Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method?.
Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method? 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 Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method?.
Solutions for Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method? in English & in Hindi are available as part of our courses for B Com.
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Here you can find the meaning of Mr. Gupta purchased machinery under hire-purchase arrangement from Mr. Pick cash price of the machinery was ? 15.500. The payment for the purchase is to be m under: On signing the agreement 73,000: First year end 5,000; Second year end Third year end * 5,000. Make necessary ledger accounts in the books of both the parties charging depreciation @10% on diminishing balance method? defined & explained in the simplest way possible. Besides giving the explanation of
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