An electrical company purchased an office equipment from Electron Berhad on hire purchase over a period of three years, paying RM2,616 on 1 January 2018, and further annual payments of RM8,000 due on 31 December 2018, 2019 and 2020. The cash price of the machine was RM24,000, the Electron Berhad charging interest at 6 per cent per annum on outstanding balances.

Required

1. Show the appropriate ledger accounts in the purchasers books for the three years by preparing the following account:

1. Office equipment account [1 mark]
2. Accumulated depreciation on office equipment account [3 marks]
3. Hire purchase loan account [13 marks]
4. Hire purchase interest account [6 marks]

b. Show how the asset would appear in the Statement of Financial Position as at 31 December 2018, depreciation at 20 per cent per annum straight-line is to be charged and interest calculated to the nearest RM. [2 marks]