Page 257 - Accountancy_F5

Add: 2 instalment 1,804,000
nd
Total amount due on 2 instalment 2,604,000
nd
5
,
Less: interest (124,000) ,2 604 000 # 105 = 124,000
Outstanding cash price on 2 instal- 2,480,000
nd
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ment
Add: 1 instalment 1,426,000
st
Total Amount due on 1 instalment 3,906,000
st
5
,
Less: interest (186,000) ,3 906 000 # 105 = 186,000
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Outstanding cash price on 1 instal- 3,720,000
st
ment
Add: down payment 930,000
Cash price 4,650,000
Hire purchase interest 350,000

Cash price = Hire purchase price – Hire purchase interest

= TZS 5,000,000 – TZS 350,000 = TZS 4,650,000

Exercise 8.4
1. Vumilia Ltd. acquired a machine on 1 January 2018 under a hire purchase. The
st
agreement provides 5 half-yearly instalments of TZS 600,000 each, the first
instalment being due on 1 July 2024. The hire purchase interest rate is 10 per
st
cent per annum:

Required: Calculate the cash price of the machine.
2. Pasha Ltd. purchased a car on hire purchase system on 1 January 2015. The
st
total cash price of the car is TZS 45,000,000. However, the agreement requires a
down payment of TZS 9,000,000 and three instalments of TZS 17,000,000, TZS
15,000,000 and TZS 10,846,000, payable annually at the end of 2015, 2016, and
2017 respectively. The interest was charged at 10 per cent per annum.

Required: Calculate interest paid by the buyer to the seller in each year.
3. Malamba Stationeries Ltd. purchased a heavy-duty printer on hire-purchase system.
As per terms of agreement, Malamba Stationaries Ltd. was required to pay TZS
3,000,000 as down payment, TZS 4,000,000 at the end of first year, TZS 3,000,000
at the end of second year, and TZS 5,000,000 at the end of third year. Interest is
charged at 10 per cent per annum.

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