On 30 September 19X7, B Wright, who prepares final accounts annually to 30 September, bought a motor lorry on hire purchase from the Vehicles and Finance Co. Ltd.

The cash price of the lorry was £3,081. Under the terms of the hire purchase agreement, Wright paid a deposit of £1,000 on 30 September 19X7, and two instalments of £1,199 on 30 September, 19X8 and 19X9. The hire vendor charged interest at 10 per cent per annum on the balance outstanding on 1 October each year. All payments were made on the due dates. Wright maintained the motor lorry account at cost and accumulated the annual provision for depreciation, at 25 per cent on the diminishing balance method, in a separate account.

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You are required to: (a) prepare the following accounts as they would appear in the ledger of B Wright for the period of the contract: (i) Vehicles and Finance Co Ltd; (ii) Motor lorry on hire purchase; (iii) Provision for depreciation of motor lorry; (iv) Hire purchase interest payable; (b) show how the above matters would appear in the balance sheet of B Wright at 30 September 19X8. The Vehicles and Finance Co. Ltd prepares final accounts annually to 30 September, on which date it charges B Wright with the interest due. Make calculations to the nearest .