If default is instalmente, Seller ea, PAvment of| 0° cei ese If Buyer sells the goods oe of the last instalment, there PAM does not get better’ que De buyer purchaser under eredit pare” hen i Accrued Method : This method is alge ee er dl is adopted e books of Hire-Purch: jpave become owner of the portion of goods only ae se Hire-Purchasers who ‘ha a ich payment has been made tet ade by them, pPayment in Cash at the time of Hi Assets A/c time of Hire-Purchase Agreement : To Cash A/c is aa 7 {Being payment of amount at th (i) For instalment due: Assets A/c (Cash price of the asset) To Hire Vend “Dr, (Amount afiateres (Being the instalmer (Total nstalments) Hire Vendor's 4 To Cash or Ba aan Ac Dr. Ontotaleash price) ToAssets Alc : (Being depreciation made at .....% on € ~~) (For transferring of interest and depreciation to Profit and Loss Ale: Profit and Loss A/c ‘Dr. ze aerost Alc ‘o Depreciation Ale oes fc and Dep. Alc transferred to P. and I. Ade) cig he lst aed by te rer whe Purchase as real purchase : (On the date of Hire-Purchase Agreement “ at Ale te Hire Vendor's A/c ao {Being tho purchase of Ascets on Hire-pUrCheNS Ay | GFortapment nt the time of Hire Purchase “Agreement | Hire Vendor's A/c ad To Cash or Bank A/c ‘payment of instalment made) aSAHITYA BHAWAN PUBLICATIONS endor's Ae Hie Gash or Bank A/c ping oreo wo Rondeprectati : "Depreciation Ale fo Asset Ae (vi) For transferring interest and depreciation Profit and Loss A’e "To Interest A/c ‘To Depreciation Ne (Being interest & dep. transferred to Profit and Loss A) BOOKS OF BUYER ‘Asset Account eal NeDr. and Cr) . Pull Value | By Depreciation Ale ese By Balance c/d ‘To Balance b/d ee Vendor Account (Cr.and Dr.) To Cash A/c ‘To Balance e/d By Interest A/c | By Batance Wa (B)IN THE BOOKS OF HIRE VENDOR | sihere is only one method of making record in the books of Hire Vendor, Whether raul the books of Hire-Purchaser has been made by the first method or by the seoond mai] described above, Journal entries in the books of Hire Verdlo made as under: (i) On the date of Hire-Purchase Agreement Hire-purchaser A/c Dr. To Hire Sales Ave (Being cash price ofthe goods sold on Hire. purchase System) (ii) On receipt of Cash at Hire-Purchase Cash or Bank A/c To Hire-purchaser A/c (Being the amount received on signing of the iii) For interest due : Hire-purchaser A/c To Interest A/c (Being interest on unpaid balance) Agreement agreement)gAHITYA BHAWAN PUBH = a7 age Bex 31) Dome lone Larry 5 yon on 37.250 tice an ants transferred to Fe oe and Depreciation Ace» Dr Dr pew. s1 Boy Cash Ae pas c Pea A aceon ave Ae Prof interest Ale c Rie a ea ve oginstalment gayment of 97.250-3 Motor Co. Dec. 31/ Bombay Motor Co. "To Cash Alc (Being the payment of instalme Dee, 31 Depreciation A/c To Motor Lorry A/c Being Depreciation niade To Depreciation A/c a Interest Account rE 2001 =] 2001 | Dec. 31 To Bombay Motor Co. 1,362.50 | Dec. 31 By P. & L. Ale 2002 [ 2002 Dec. 31/ To Bombay Motor Co. 930.63 | Dec. 31, By P. & L. Alc 8, 2003 Motor Lorry Account Jan. 1 | To Cash A/c on a 10,000.00 | Dec. 31, By Depreciation AV 41) To Bombay Motor C/o. (8697.50 |Dec. 81 By Belasco okies va z (18,637.50 dan. | 2002 Deen Paes 14,912.50 | Dec. 31 By Depreciation Ale Motor C/o. | 9,069.37 |Dec. 31 By Balance od % (23,98: ® He CBy Motor Lorry Ale By Interest Ale Bi jrocasn ne | By Interest Me cu ae ‘Account ary Dee. 31) By P. & L. Ale 2002 Dec. 31| By P. & L. Ale 2003 Dee.31| ByP. & L. Ale —k Beds | To Motor Lorry Ale eg sar a 203 Bohs to Motor Lorry Av 7.2 ESS corso ares =e asa EB 5 97,250 3,7 Shi on. 1 ¢505 9.08250 = 30,172.50, Dec. 31 By Motor Lorry A/e By Motor Lorry Ale Entries in the Books of Bombay Motor Co. (Hire-Vendor) z z mar Jan.1 | Madras Transport Co. Dr. To Hire-Sales Ale | Being Cash price of Motor Lorry sold on hire-purchase) Dr. Cash Ale ‘To Madras Transport Co. Jan. ‘Madras Transport Co. To Interest A/ ‘Cash A/c re Dr. To Madras Transport Co. | Being amount received on account of annualinstalt Interest A/c ‘kk a | on PTO & Le a. pecount transfered wo Profit & Lone Ne Hire-Sales A/c ait Be Trading Me fle Ato Trading Ne) Madras Transport port Co. To Interest A/ [ing interes @ 5% on 18,612 50) _ Dec 31 Dee. 31 Dee, 31 2002 Dee 31 EH | (Being amount received on signing of the Agreement) ri Dr. LF. 37,250 10,000 1,362.50 10,000 10,000 1,362.50 1,362.50 37,250 | 37,250“2 SAHITYA BHAWAN PUBLICATIONS Dec, 1] Cash Ale 7 10,000 Madras Transport Co. tment Dec 31/ Interest AE Blea tatcaes totes secre to Profit & Loss Wi 2003 | Being the balants of Interest Account transferred to La Dee, 31 | Madras Transport Co To. Interest Ale Being interest di) : Dee. 31 Cash A/c 10,000 ‘To. Madras Transport Co Being amount reed on scout of annual instalment) 3 Dee. 31 Interest A/e ‘To. Profit & Loss Ae (Being the balance of Interest Account 930.69 456.87 456.87 37,260.00] Cash Ale 1,362.50} Cash A/c Balance ofd 38,612.50) Cash Ale Jan. 1 | To Balance b/d 18,612.50] Balance od Dec. 31 To Interest A/c |__ 930.63] x | 19,548.13] 2008 Jan, 1 To Balance b/d 9,543.13] Dee. 81| To Interest A/e 456.87| x | 10,000.00] oo Hire-Sales Account £0 |e] aor Dec, 31 To Trading A/c Dec. 1 By Madras Transport Co. Interest Account 001 ] ® | 2001 Dec.31| To P. & L. Ale | 1,362.50 | Dee. 31) By Madras Transport Co. 2002 | 2002 j Dec. 81] To P, & L. Ale 930.63 |Dec.31) By Madras Transport Co. _#58 2003 | 2008 Dec. 31| To P&L. Ale 456.87 | Dec. 31) By Madras Transport Co. | OER eee ee ‘Second Method (Credit Purchase Method) Entries in the Books of Madras Transport Company (Hire-Purchaser) _- “a00r awn Le TS Oe Jan.1 | Motor Lorry Ale : Dr. 37,250| agp | To Bombay Motor Co. a (Being purchases of Motor Lorry) Jan, 1 | Bombay Motor Co. Dr. 10,000 | go | To Cash Ale : | Being payment to Bombay Motor Co.) _ 1308HIRE reat Al To, Bombay Motor Co. mbay Motor Co, To Cash Ale 41 | Depreciation A/c 1 Pfr. Motor Lorry Ave (going depreciation ninde at 10 | PAL. Av BE NTo. Interest A/c To Depreciation A/c ing. the balance P&L. Ne) y1| Bon MF Interest Alc Be oS“ Bombay Motor Co, Being intarect vocoming Sv ay Motor Co. Cash A/c 31/ Depreciation A/c Bett) TTo. Motor Lorry A/c speciation made at 10% on 39,525) Being a1 P&L. Ave pets) "To Interest Ale To Depreciation A/c PURCHASE § 443 1,362.50 1,862.50 Dr. 10,000 10,000 Dr. Dr 15,087.50 of Interest and Depreciation Accounts transferred to 930.63 930.63 10,000 10,000 3,852.50 4,288.13 930.63 3,352.50 (Being the balance ofthe Interest and Depreciation Accounts transferred to woos [LPEL AO) 31, Interest A/c ae To, Bombay Motor Co. (Being interest being due) pee 81{ Bombay Motor Co To Cash Ae (Being payment of annual instalment) ee 31) Depreciation Ale To Motor Lorry Ale (Being depreciation made © 10% on ¢ 30,172.50) De.31P. & L. Ale | "To" interest Ale [nak Deprecistion we Dr. 456.87 Dr. 10,000 Dr 3,017.25 | Dr. 3,474.12 Being balance of Interest_and Dep. AccountstransferredtoP. &L.Aé) Posting under Second Method Motor Lorry Account 200 z 4.1 | To Bombay | Motor Co 7,250.00 37,250.00 | | Jen. 1 | ‘To Balance b/d (33,525.00 2003, #an.1 | To Balance b/d 30,172.50 72.50 2001 Dec. 31 Dec. 31 2002 Dec. 31 Dec. 31 2003 Dec. 31 Dec. 31 By Depreciation A/e By Balance e/d 33,525.00 [37,250.00 | 3852.50 | 30,172.50 % (38,525.00 By Depreciation Ae By Balance b/d By Depreciation Ale | 3,017.25 By Balance c/d | 27,155.25 & | 30,172.50 3