Question
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,
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
- Show the appropriate ledger accounts in the purchasers books for the three years by preparing the following account:
- Office equipment account [1 mark]
- Accumulated depreciation on office equipment account [3 marks]
- Hire purchase loan account [13 marks]
- 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]
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