Query regarding hire purchase sale

01) Loading on Hire Purchase Price

Under Hire Purchase system, a firm sells goods on Cash basis as well as Hire Purchase basis. When the Cost price is also given than what should be the equation for loading? 

Loading = Hire Purchase Price Less (-) Cash Sale 

or

Loading = Hire Purchase Price Less (-) Cost of goods.

02) Goods repossed Account

When goods are repossed, than what are the provisions regarding Loading on the Opening Balance of  Hire Purchase Stock and Op. Balance of Hire Purchase Debtors? How do we know whether goods repossed are from the current year's sale or from the Op. Balance of the Stock & Debtor's A/c if there is no comment?

03) When the goods are repossed from the Current year's sale than do we need to pass the loading entry on the goods repossed?

 

Replies (1)

01)incase of goods sold on hp basis the loading should be calculated using HP price-cash price

     incase of goods sold on cash basis the loading should be calculated using cash price-cost of purchase

02)incase of loading in hp debtors  we've to compute how much is unrealized profit and credit to goods repossessed account.

and if there is no comments regarding sale we've to assume it as current year sale.

03)yes we've to pass loading entry on goods repossessed account. 

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