Topic: Prepare necessary GL account for parties
I have a question below.
Raja purchased an asset under hire purchase system for 60,000 payments to be made 15,000 under down and 3 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 the diminishing balance method.
Due to financial difficulties, Raja could not pay any installment after the 1st installment and the selling company took possession of the asset. the selling company after spending 1,500 on repairs it sold away from the asset for 38,000.
Prepare necessary GL accounts in the books of both the parties.
Please help me with this.