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Singh Coal Ltd. agreed to purchase wagon on the hire purchase system for Rs. 4600. Rs 600 paid when wagon was acquired on 1 st Jan. 2018 and the balance was to be paid by annual installments of Rs 800 plus interest at 5% p.a. Depreciates the wagon 10% p.a. on reducing method. Calculate interest and depreciation and also pass necessary journal entries and ledger both the purchaser and vendor.?
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Singh Coal Ltd. agreed to purchase wagon on the hire purchase system f...
Calculation of Interest and Depreciation:

- Total cost of wagon on hire purchase system = Rs. 4600
- Amount paid at the time of acquisition = Rs. 600
- Balance amount to be paid = Rs. 4000
- Annual installment = Rs. 800
- Interest rate = 5% p.a.
- Depreciation rate = 10% p.a.

Interest Calculation:

- Interest for the first year = Rs. 4000 * 5% = Rs. 200
- Interest for the second year = Rs. (4000 - 800) * 5% = Rs. 160
- Total interest = Rs. 360

Depreciation Calculation:

- Depreciation for the first year = Rs. 4000 * 10% = Rs. 400
- Depreciation for the second year = Rs. (4000 - 800) * 10% = Rs. 320
- Total depreciation = Rs. 720

Journal Entries:

On 1st Jan. 2018:

- Wagon A/c Dr. 4600
- To Singh Coal Ltd. A/c 4600 (Being wagon purchased on hire purchase system)

At the end of the first year:

- Interest A/c Dr. 200
- To Singh Coal Ltd. A/c 200 (Being interest charged on outstanding balance)
- Depreciation A/c Dr. 400
- To Wagon A/c 400 (Being depreciation charged on wagon)

At the end of the second year:

- Interest A/c Dr. 160
- To Singh Coal Ltd. A/c 160 (Being interest charged on outstanding balance)
- Depreciation A/c Dr. 320
- To Wagon A/c 320 (Being depreciation charged on wagon)

Ledger Accounts:

Singh Coal Ltd. A/c

Particulars Amount Particulars Amount
To Wagon A/c 4600 By Bank A/c 600
By Interest A/c 360 By Depreciation A/c 720
By Balance c/d 3920 4600 4600

Wagon A/c

Particulars Amount Particulars Amount
To Bank A/c 600 By Singh Coal Ltd. A/c 4600
To Depreciation A/c 400 By Balance c/d 3200
To Depreciation A/c 320 4320 4320

Interest A/c

Particulars Amount Particulars Amount
To Singh Coal Ltd. A/c 200 By Balance c/d 160
To Singh Coal Ltd. A/c 160 360 360

Depreciation A/c

Particulars Amount Particulars Amount
To Wagon A/c 400 By Balance c/d 720
To Wagon A/c 320 720 720
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Singh Coal Ltd. agreed to purchase wagon on the hire purchase system for Rs. 4600. Rs 600 paid when wagon was acquired on 1 st Jan. 2018 and the balance was to be paid by annual installments of Rs 800 plus interest at 5% p.a. Depreciates the wagon 10% p.a. on reducing method. Calculate interest and depreciation and also pass necessary journal entries and ledger both the purchaser and vendor.?
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Singh Coal Ltd. agreed to purchase wagon on the hire purchase system for Rs. 4600. Rs 600 paid when wagon was acquired on 1 st Jan. 2018 and the balance was to be paid by annual installments of Rs 800 plus interest at 5% p.a. Depreciates the wagon 10% p.a. on reducing method. Calculate interest and depreciation and also pass necessary journal entries and ledger both the purchaser and vendor.? 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 Singh Coal Ltd. agreed to purchase wagon on the hire purchase system for Rs. 4600. Rs 600 paid when wagon was acquired on 1 st Jan. 2018 and the balance was to be paid by annual installments of Rs 800 plus interest at 5% p.a. Depreciates the wagon 10% p.a. on reducing method. Calculate interest and depreciation and also pass necessary journal entries and ledger both the purchaser and vendor.? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Singh Coal Ltd. agreed to purchase wagon on the hire purchase system for Rs. 4600. Rs 600 paid when wagon was acquired on 1 st Jan. 2018 and the balance was to be paid by annual installments of Rs 800 plus interest at 5% p.a. Depreciates the wagon 10% p.a. on reducing method. Calculate interest and depreciation and also pass necessary journal entries and ledger both the purchaser and vendor.?.
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