Upload
halle-baulch
View
222
Download
2
Tags:
Embed Size (px)
Citation preview
Introduction
There are different ways by which goods can be sold that is possession and as well ownership of goods will be passed form the seller to the purchaser. Goods can be sold for cash as well as for credit. Another way of selling goods is either on instalment purchase system or hire purchase system.
Instalment purchase system :The possession and ownership of goods
immediately passes from the seller to the buyer but the payment of the total price will be made in the instalments.
Hire Purchase :The buyer acquires the possession of the goods
immediately and agrees to pay the total hire purchase price in Instalments.
Terms Used in Hire Purchase Transactions
• Hire Purchaser or hirer: He is the buyer of the goods.• Hire Vendor: He is the seller of the goods.• Cash price : It is the price on which purchaser can
buy goods for cash.• Hire Purchase Price: It is the total amount which the
Hire Purchaser is required to pay to the hire vendor.• Down Payment: It is the price which is paid by the
hire purchaser to the vendor at the time of agreement.
• Interest : It is the cost of borrowed funds to the asset.
• Instalments: These are convenient amounts in which the hire purchase price is split.
• Instalments Due: These are instalments which are due in the accounting period but not paid by the hire purchaser.
Hire Purchase Instalment Purchase
It is an agreement of hiring It is an agreement of sale
The parties to contract are called hire purchaser and Hire vendor
The parties to contact are called buyers and sellers.
Only the possession of the goods is transferred not the ownership
The ownership of the goods passes from seller to the buyer immediately at the time of sale
The buyer can return the goods to the vendor if he does not want to pay the rest of instalments.
The buyer can’t escape the liability for the payment of future instalments by returning the goods.
The buyer can’t hire out, sell,transfer,destroy or damage the goods.
As the buyer becomes the owner of the goods he can dispose the goods in any manner as he likes.
Hire Vendors book• For the opening stock of goods. Hire purchase trading A/C Dr. To Hire purchase stock account • For Instalment due from Hire Purchase customersHire purchase trading A/c Dr. To instalment Due • For the goods sold on Hire purchase basisHire purchase trading A/c Dr
To goods sold on Hire purchase A/C
• For cash received Bank A/c Dr ToHire
Purchase trading A/C • For repossession of goods due to non payment of instalmentGoods repossessed A/C Dr
To hire purchase trading A/C• For closing stock of goods lying with customersHire purchase stock A/c Dr
To Hire Purchase trading A/C • For Instalments due from hire purchase customer at end of the
year Instalments due A/C Dr
To Hire Purchase trading A/C
• For loading of opening stock with customersStock Reserve A/C Dr
To Hire Purchase trading A/C • For loading of Closing Stock with customers Hire Purchase trading A/C Dr
To Stock reserve A/C• For loading of Goods on Hire PurchaseGoods sold on Hire Purchase A/C Dr
To Hire Purchase trading A/C
• For profit or Loss on Hire purchase transactionProfitHire Purchase A/C Dr To P/L A/CLossP/L A/C Dr
To Hire Purchase trading A/C
Hire Purchase Trading A/cParticulars Rs Particulars Rs
To Opening Balances -Hire Purchase stock - Hire Purchase Debtors
****** By Bank/Cash *******
To goods sold on Hire Purchase ****** By Goods Repossessed A/C *******
To Stock reserve A/c ***** By closing balances - Hire Purchase Stock - Hire purchase Debtor
*****
To profit and Loss A/C ****** By stock reserve A/C *****
By goods sold on hire purchase *****
By profit and Loss A/C *****
Stock And Debtors MethodUnder this method following six accounts are
prepared:• Hire Purchase Stock Account• Hire Purchase Debtor Account• Shop Stock Account• Hire Purchase Adjustment Account• Goods sold on Hire Purchase Account• Goods Repossessed Account
ExampleQuestionHarish sells goods on Hire purchase at cost plus 50% , from the following
particulars relating to the hire purchase department for the year ending 31st dec 2009, prepare H.P A/C and Stock reserve account.
Jan1 Stock with Hire Purchase customer at selling price Rs 4500.Jan1 Stock at shop at cost Rs 9,000Jan1 Instalment due Rs 2,500Jan1 Cash received from customers Rs30,000.Dec31 Goods purchased during the year Rs30,000.Dec31 Goods repossessed (Instalments due Rs 1000 ) Valued at Rs250.Dec31 Hire Expenses Rs250Dec31 Instalment due customer’s paying 4,500.Dec31 Stock at shop at cost (Excluding repossessed goods) Rs10,000.
SolutionHire Purchase stock A/C
Particulars RS Particulars Rs
To Balance b/d 4,500 By H.P. Debtors A/c 33,000
To goods sold on H.P. A/c Cost 29,000 Profit 14,500 43,500
By balance c/d (b.f.) 15,000
-------------------48,000--------------------------------------
-------------------48,000----------------------------------------
Hire Purchase Debtor A/CParticulars RS Particular Rs
To balance b/d 25,00 By Cash 30,000
To Hire purchase stock A/C (b.f.)
33,000 By goods repossessed A/C 250
By H.P. Adjustment A/C 750
To balance c/d 4,500
-------------------35,500--------------------------------------
------------------35,500------------------------------------
Shop Stock A/cParticulars RS Particulars Rs
To Balance b/d 9,000 By cost of goods sold on H.P. (b.f.) 29,000
To Purchases A/c 30,000 By balance c/d 10,000
------------------39,000______________________
_____________39,000________________________
HP Adjustment A/cParticulars RS Particulars Rs
To stock reserve A/c(( 50/150)*15000)
5,000 By stock reserve A/c((50/150)*4500)
1,500
To hire purchase debtors 750 By good sold on H.P. A/c((50/150)*43500)
14,500
To hire expenses 250
To profit and loss Account 10,000
-----------------16,000___________________
___________16,000______________________
Good sold on H.P. A/CParticulars Rs Particulars Rs
To H.P. adjustment A/c 14,500 By HP stock A/c` 43,500
To Trading A/c 29,000
__________________43,500_________________________________
__________________43,500_________________________________
Stock Reserve AccountParticulars Rs Particulars Rs
To H.P. adjustment A/c 1,500 By balance b/d 1,500
To balance c/d _________5,000__________________
By H.P. adjustment A/c _________5,000__________________
HP Trading AccountParticulars Rs Particulars Rs
To stock with customers 4,500 By cash a/c 30,000
To instalments due 2,500 By goods repossessed a/c 250
To goods sold on H.P. a/c 43,500 By HP stock a/c 15,000
To stock reserve a/c 5,000 By instalment due a/c 4,500
To hire expenses 250 By stock reserve a/c 1,500
To net profit 10,000 By good sold on H.P. a/c 14,500
___________65,750______________________
_________65,750____________________