RJ commenced business on 1 January 2008. He sells refrigerators, all of one standard type, on hire
Question:
RJ commenced business on 1 January 2008. He sells refrigerators, all of one standard type, on hire purchase terms. The total amount, including interest, payable for each refrigerator, is £300.
Customers are required to pay an initial deposit of £60, followed by eight quarterly instalments of
£30 each. The cost of each refrigerator to RJ is £200.
The following trial balance was extracted from RJ’s books as on 31 December 2008.
850 machines were sold on hire purchase terms during 2008.
The annual accounts are prepared on the basis of taking credit for profit (including interest) in proportion to the cash collected from customers.
You are required to prepare the hire purchase trading account and income statement for the year 2008 and balance sheet as on 31 December 2008.
Ignore depreciation of non-current assets.
Show your calculations.
Step by Step Answer:
Frank Woods Business Accounting Volume 2
ISBN: 9780273712138
11th Edition
Authors: Frank Wood, Alan Sangster