Question

Rwanda Express Ltd intends to acquire three new heavy Lorries at a cost of Sh.500, 000 each. A hire purchase financing arrangement is agreed on with Kopesha Ltd w.e.f 1 January 2013.

Rwanda Express Ltd will pay opposite of Ksh 225, 000 at the beginning of the contract and two annual installments of Sh. 600,000 at the end of the years, 2013 and 2014 and final installments of Ksh.509, 775 on 31^st December 2015.

The rate of interest is 25% on the balance outstanding on 1^st January each year and paid on 31^st December. Rwanda Express Ltd has a 25% depreciation policy on vehicles on straight-line method and assumes a salvage value of Ksh33, 325 for each vehicle at the end of its useful life.

REQUIRED:

Prepare Rwanda Express Ltd books, including the relevant positions of the final accounts for the years, ended 2013,2014,2015 and 2016