Page 271 - Accountancy_F5

3. For sale of goods repos- Dr Bank account xx
sessed: Cr Assets repossessed account xx
4. Any balance left in Dr Assets repossessed account xx

goods repossessed Cr Statement of profit or loss xx
account is either a With the profit on repossession or
FOR ONLINE READING ONLY
profit or a loss, which is
ultimately transferred to Dr Statement of profit or loss xx

profit and loss account: Cr Assets repossessed account xx
With the loss on repossession
LANGUAGE EDITING
In the books of hire purchaser

5. For closing the books of Dr Hire vendor account xx
the vendor: Cr Asset account xx

6. For closing the asset Dr Statement of profit or loss xx
account: Cr Asset account xx
With the loss on repossession
Dr Asset account xx

Cr Statement of profit or loss xx
With the profit on repossession

Example 8.9
On 1 January 2020, Karume Ltd. sold a used tractor for TZS 28,000,000 (cash price)
st
to Shambani Winners Enterprises on hire purchase. Payment was to be made as TZS
7,500,000 cash down payment and three equal instalments of TZS 7,500,000 at the end
of each year. A rate of interest was 5 per cent per annum. The rate of depreciation for
the asset was 10 per cent per annum on reducing balance method. Shambani Winners
Enterprises made the down payment and managed to pay the first instalment at the
end of the year 2020, but could not pay the second instalment. Consequently, Karume
Ltd. repossessed the tractor. Karume Ltd. spent TZS 300,000 on repairs and disposed
of the tractor for TZS 15,350,000.

Required: Prepare the necessary ledger accounts in the books of both Karume Ltd
and Shambani Winners Enterprises.

Student’s Book Form Five
258

23/06/2024 17:36
ACCOUNTANCY_DUMMY_23 JUNE.indd 258
ACCOUNTANCY_DUMMY_23 JUNE.indd 258 23/06/2024 17:36