Preparation of Hire Purchase Account And The Vendor’s Account - SS3 Accounting Lesson Note
Question:
The following transactions were derived from the books of MUSA VENTURES for the month of March 2022. You are required to prepare in tabular form:
-
The hire purchase account
-
The vendor’s accounts
|
Date |
Transaction |
Amount |
|
03/01/2022 |
Purchased goods from ABC Suppliers on hire purchase |
₦100,000 |
|
03/03/2022 |
Sold goods to XYZ Co. for cash |
₦50,000 |
|
03/05/2022 |
Received goods from ABC Suppliers on hire purchase |
₦100,000 |
|
03/07/2022 |
Sold goods to PQR Inc. on hire purchase |
₦80,000 |
|
03/10/2022 |
Made a down payment to ABC Suppliers for hire purchase |
₦20,000 |
|
03/12/2022 |
Received payment from PQR Inc. for hire purchase sale |
₦30,000 |
|
03/15/2022 |
Paid instalment to ABC Suppliers for hire purchase |
₦20,000 |
|
03/18/2022 |
Sold goods to MNO Corp. for cash |
₦40,000 |
|
03/20/2022 |
Received payment from XYZ Co. for cash sale |
₦50,000 |
|
03/23/2022 |
Received payment from MNO Corp. for cash sale |
₦40,000 |
|
03/25/2022 |
Paid instalment to ABC Suppliers for hire purchase |
₦20,000 |
|
03/28/2022 |
Sold goods to RST Co. for cash |
₦30,000 |
Note:
-
We assume that the hire purchase agreement with ABC Suppliers has an interest rate of 14% per annum, calculated on a simple interest basis.
-
The interest on each instalment is calculated as follows: Interest = (Balance x Rate x Time) / 365, where Rate = 14% and Time is the number of days since the last payment.
Answer:
Vendor's BooksABC Suppliers Hire Purchase Ledger for MUSA VENTURES
|
Date |
Transaction |
Instalment (₦) |
Interest (₦) |
Total (₦) |
Balance (₦) |
|
03/01/2022 03/05/2022 03/10/2022 03/15/2022 03/25/2022 Total |
Sold goods Received payment Received down payment Received instalment Received instalment |
0 0 0 20,000 20,000 40,000 |
0 0 0 4,000 2,800 6,800 |
100,000 0 20,000 24,000 22,800 166,800 |
100,000 100,000 80,000 56,000 33,200 33,200 |
Hirer's Books
MUSA VENTURES Hire Purchase Ledger with ABC Suppliers
|
Date |
Transaction |
Instalment (₦) |
Interest (₦) |
Total (₦) |
Balance (₦) |
|
03/01/2022 03/05/2022 03/10/2022 03/15/2022 03/25/2022 Total |
Purchased goods Received goods Made a down payment Paid instalment Paid instalment |
0 0 0 20,000 20,000 40,000 |
0 0 0 4,000 2,800 6,800 |
100,000 0 20,000 24,000 22,800 166,800 |
100,000 100,000 80,000 56,000 33,200 33,200 |
Note:
-
The Vendor's books show the transactions related to the hire purchase agreement from the vendor's perspective.
-
The Hirer's books show the transactions related to the hire purchase agreement from the hirer's perspective.