InvestorQ : Raja purchased an asset under hire purchase system for 60,000 payments to be made 15,000 down and three installments of 18,000 each at the end of each year. The rate of interest is 10% p.a. Raja depreciates assets @ 10% p.a. on diminishing balance.

# Raja purchased an asset under hire purchase system for 60,000 payments to be made 15,000 down and three installments of 18,000 each at the end of each year. The rate of interest is 10% p.a. Raja depreciates assets @ 10% p.a. on diminishing balance.

2 years ago
Follow
Calculation of interest:
Hire purchase price:
Down payment = 15,000
Installment 18000*3 = 54,000
Less: Cash Price = 60,000
Total interest = 9,000
Total = 69,000

 Analysis of payment to vendors Year Opening balance of cash price Toward Principal Toward Interest Installment The closing price of the cash price 0 60,000 15,000 - - 45,000 1 45,000 13,500 4,500 18,000 31,500 2 31,500 14,850 3,150 18,000 16,650 3 16,650 16,650 1,350 18,000 - Total 9,000
 Statement of Depreciation Year Opening Balance Amount of depreciation Closing Balance 1 60,000 6,000 54,000 2 54,000 5,400 48,600 3 48,600 4,860 43,740
149 Views