Page 276 - Accountancy_F5

(iv) 31 December 2021:
st
Hire purchase interest = 15% × 120,000,000 = TZS 18,000,000

In the books of Migombani Car Dealers

Dr Chai traders account Cr
FOR ONLINE READING ONLY
Date Details TZS Date Details TZS
01 Jan, 2020 Sales 270,000,000 1 Jan. 2020 Bank 90,000,000
st
st
31 Dec. 2020 H-purchase 27,000,000 31 Dec. 2020 Bank 87,000,000
st
st
interest* ___________ 31 Dec. 2020 Balance c/d 120,000,000
st
297,000,000 297,000,000
LANGUAGE EDITING
01 Jan. 2021 Balance b/d 120,000,000 31 Dec. 2021 Van repossessed 88,200,000
st
st
31 Dec. 2021 H-purchase 18,000,000 31 Dec. 2021 Balance c/d 49,800,000
st
st
01 Jan., 2022 interest* 138,000,000 138,000,000
st
Balance b/d 49,800,000
31 December 2020; Interest account = 15 per cent of TZS 180,000,000
st
31 December 2021; Interest account = 15 per cent of TZS 120,000,000
st
Dr Repossessed commercial van account Cr
Date
Details
TZS
Date LANGUAGE EDITING TZS
Details
st
31 Dec. 2021 Chai Traders 88,200,000 31 Dec. 2021 Cash (resale) 92,000,000
st
st
31 Dec. 2021 Cash (repairs) 2,000,000
st
31 Dec. 2021 Profit or loss 1,800,000 ___________
92,000,000 92,000,000
The profit or loss amount on 31 December, 2021 in the repossessed account is the
st
balancing figure.
Exercise 8.6
(1) State the meaning of the term “repossession of assets” and explain any three (3)
rights to the hire vendor (owner) when the hire purchase agreement is terminated.
(2) Kwetu Ltd. sold a piece of machinery to Shirati Ltd. on 1st January 2019 under a
hire purchase agreement. The payments were to be made in four annual instalments
of TZS 42,300,000 each, payable at the end of each year. The rate of interest at
5% was to be charged. Shirati Ltd. defaulted at the time of the third instalment
and Kwetu Ltd. repossessed the machinery. Shirati Ltd. charged depreciation at
10% per annum on written down value method.
Required: Prepare the necessary ledger accounts in the books of Shirati Ltd.
(3) Karim Traders purchased some furniture from Sokoni Ltd. on hire purchase system

Student’s Book Form Five
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