Hire Purchase
This query is : Resolved
30 April 2011
The following is the question asked in 2001 in November attempt in IPCC. I can't understand the solution given by the institute. Instead I've done it by another method taught in the coaching. I'm getting a difference of Rs. 1,000 in the Profit. Please see my solution in the attachment and help me as to where my mistake is. The question is:
Welwash (Pvt.) Ltd. sells washing machines for outright cash as well as on hire-purchase basis. The cost of a washing machine to the company is Rs. 10,500. The company has fixed cash price of the machine at Rs. 12,300 and hire-purchase price, at Rs. 13,500 payable as to Rs. 1,500 down and the balance in 24 equal monthly installments of Rs. 500 each.
On 1st April, 2000 the company had 26 washing machines lying in its showroom. On that date 3 installments had fallen due, but not yet received and 675 installments were yet to fall due in respect of machines lying with the hire purchase customers.
During the year ended 31st March, 2001 the company sold 130 machines on cash basis and 80 machines on hire-purchase basis. After paying five monthly installments, one customer failed to pay subsequent installments and the company had to repossess the washing machine. After spending Rs. 1,000 on it, the company resold it for Rs. 11,500.
On 31st March, 2001 there were 21 washing machines in stock, 810 installments were yet to fall due and 5 installments had fallen due, but not yet received in respect of washing machines lying with the hire-purchase customers. Total selling expenses and office expenses including depreciation on fixed assets totaled Rs. 1,60,000 for the year.
You are required to prepare for the Accounting Year ended 31st March, 2001:
(i) Hire purchase Trading Account, and
(ii) Trading and Profit and Loss Account showing net profit earned by the company after making provision for income-tax @ 35%.
Welwash (Pvt.) Ltd. sells washing machines for outright cash as well as on hire-purchase basis. The cost of a washing machine to the company is Rs. 10,500. The company has fixed cash price of the machine at Rs. 12,300 and hire-purchase price, at Rs. 13,500 payable as to Rs. 1,500 down and the balance in 24 equal monthly installments of Rs. 500 each.
On 1st April, 2000 the company had 26 washing machines lying in its showroom. On that date 3 installments had fallen due, but not yet received and 675 installments were yet to fall due in respect of machines lying with the hire purchase customers.
During the year ended 31st March, 2001 the company sold 130 machines on cash basis and 80 machines on hire-purchase basis. After paying five monthly installments, one customer failed to pay subsequent installments and the company had to repossess the washing machine. After spending Rs. 1,000 on it, the company resold it for Rs. 11,500.
On 31st March, 2001 there were 21 washing machines in stock, 810 installments were yet to fall due and 5 installments had fallen due, but not yet received in respect of washing machines lying with the hire-purchase customers. Total selling expenses and office expenses including depreciation on fixed assets totaled Rs. 1,60,000 for the year.
You are required to prepare for the Accounting Year ended 31st March, 2001:
(i) Hire purchase Trading Account, and
(ii) Trading and Profit and Loss Account showing net profit earned by the company after making provision for income-tax @ 35%.
01 May 2011
I have attched the file by the name of 43_2001__nov_4_.docx
I don't know how to share it's link here! Sorry :(
I don't know how to share it's link here! Sorry :(
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