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Instalments on sofa set could not be continued, instead, OKO Ltd. repossessed the
sofa set after the payment of the fourth (4 ) instalment. Inventory in trade on 31
st
th
December, 2020 amounted to TZS 35,000,000 excluding returned sofa set.
Required: Prepare the following accounts in the books of Oko Ltd:

(i) Hire purchase account;
FOR ONLINE READING ONLY
(ii) General trading account; and
(iii) Memorandum of hire purchase debtors.

LANGUAGE EDITING
Solution 8.12
(i) Oko Ltd.’s hire purchase account
LANGUAGE EDITING
Dr Hire purchase account Cr

Details TZS Details TZS
General trading a/c 10,500,000 Bank (cash received) (w1) 5,100,000
H-purchase gross profit 1,650,000 Cost element of goods repossessed ( w2) 2,450,000
_________ Cost element of outstanding instal. ( w3) 4,600,000
12,150,000 12,150,000

(ii) Oko Ltd.’s trading account

Dr General trading account Cr

Details TZS Details TZS
Purchases 270,000,000 Cash sales 310,000,000
Less: Closing inventory 35,000,000 Hire purchase sales 10,500,000
Cost of goods sold 235,000,000
General gross profit 85,500,000 ___________
320,500,000 320,500,000

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