On January 1, 2015, A purchased a machine (under Hire Purchase System) from B valued at 37,000.

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On January 1, 2015, A purchased a machine (under Hire Purchase System) from B valued at ₹37,000. A sum of ₹5,000 was paid at the time of signing the contract and the balance in four yearly instalments of ₹8,000 plus interest at 5% payable on 31st December each year. The machine was depreciated at 10% on Diminishing Balance Method. Show Machine Account, Interest Suspense Account and Vendor’s Account for four years in the books of A.

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Financial Accounting Volume II

ISBN: 9789387886230

4th Edition

Authors: Mohamed Hanif, Amitabha Mukherjee

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