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.
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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.

Answer
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ramya Bhaskaran answered.
1 month ago
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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
YearOpening balance of cash priceToward PrincipalToward InterestInstallmentThe closing price of the cash price
060,00015,000--45,000
145,00013,5004,50018,00031,500
231,50014,8503,15018,00016,650
316,65016,6501,35018,000-
Total9,000

Statement of Depreciation
YearOpening BalanceAmount of depreciationClosing Balance
160,0006,00054,000
254,0005,40048,600
348,6004,86043,740
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