Page 284 - Accountancy_F5

Period 2018 2019 2020
Instalments (TZS) 49,500,000 49,500,000 49,725,000

The depreciation policy of Ndatulu Transport Ltd. is 20% per annum on straight line
method. The hire purchase interest implicit in the sale as used by Banana Finance Ltd.,
is 30 per cent per annum.
FOR ONLINE READING ONLY
Required: Post the required entries in the general ledger of Ndatulu Transport Ltd. for
all the periods covered by the hire purchase transaction. Make assumption
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that the total hire purchase interest payable is to be taken into consideration
at the beginning of the hire purchase transaction.
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3. Hatua farmers purchased five popcorn machines on hire purchase on 1 July 2018.
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The cash price of each popcorn machine is TZS 10,000,000. Hatua farmers were
required to pay 25 per cent of the cash price as a down payment on receipt of the
machine and the balance in five yearly instalments together with interest of 5 per
cent per annum. Unfortunately, Hatua farmers failed to pay the third instalment due
on 30 June, 2021. It was agreed that two popcorn machines would be returned
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to the vendor and their values be adjusted against the due amount. The popcorn
machines to be returned are charged depreciation at 25 per cent per annum on the
diminishing balance method. The repossessed popcorn machines were overhauled
at a cost of TZS 400,000 and sold for TZS 9,000,000.
Required: Show necessary ledger accounts in the books of both parties. Books are
closed on 30 June every year, and a depreciation at 20 per cent per annum
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is charged.
4. The Saanane tour safaris Ltd., purchased from Oceanic Boat Ltd. a tourist boat
on 1 July 2020 the cash price being TZS 164,000,000. The purchase was on
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hire purchase basis, TZS 50,000,000 being paid on the signing of the contract
and, thereafter, TZS 50,000,000 being paid annually on 30 June, for three years
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consecutively starting from June 2021. Interest was charged at 15 per cent per
annum. Depreciation was written off at the rate of 25 per cent per annum on the
reducing balance method. The Saanane tour safaris Ltd. closes its books every
year on 30 June.
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Required: Prepare the necessary ledger accounts in the books of SAANANE tour
safaris Ltd.
5. Daima Company acquired a plant on the hire purchase system from Dar Machinery
Ltd., agreeing to pay four annual instalments of TZS 6,000,000 each payable at
the end of each year. There is no down payment. Interest is charged at 20 per
cent per annum and is included in the annual instalments. Because of financial
difficulties, Daima Company after having paid the first and second instalments,

Student’s Book Form Five
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