Q7:-On 1st January, 2012 A sells a truck to B, on the instalment payment system, on the following conditions : (1) The purchase price of the truck is $ 1,00,000. (2) This amount is payable to A in four equal annual instalments along with 12% interest per annum on the outstanding balance, the first instalment being payable on the date of sale. (3) B in turn, hires out the truck to A for a monthly hire of $ 3,000 per month from 1st January, 2012. The hire charges are to be adjusted, at the end of each year, against the amount due to A on account of principal and interest, any difference being settled in cash. B, charges 20% depreciation (on the written-down-value method) on the truck. All payments are made as per the agreement. On 1st January 2015, the truck is sold by B to A for $ 15,000 in cash. Show in B’s books, Truck Account, Interest Suspense Account and A's Account.
Q7:-On 1st January, 2012 A sells a truck to B, on the instalment payment system, on the following conditions : (1) The purchase price of the truck is $ 1,00,000. (2) This amount is payable to A in four equal annual instalments along with 12% interest per annum on the outstanding balance, the first instalment being payable on the date of sale. (3) B in turn, hires out the truck to A for a monthly hire of $ 3,000 per month from 1st January, 2012. The hire charges are to be adjusted, at the end of each year, against the amount due to A on account of principal and interest, any difference being settled in cash. B, charges 20% depreciation (on the written-down-value method) on the truck. All payments are made as per the agreement. On 1st January 2015, the truck is sold by B to A for $ 15,000 in cash. Show in B’s books, Truck Account, Interest Suspense Account and A's Account.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 23P: Notes Receivable On January 1, 2019, Lisa Company sold machinery with a book value of 118,000 to...
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Q7:-On 1st January, 2012 A sells a truck to B, on the instalment payment system, on the following conditions :
(1) The purchase price of the truck is $ 1,00,000.
(2) This amount is payable to A in four equal annual instalments along with 12% interest per annum on the outstanding balance, the first instalment being payable on the date of sale.
(3) B in turn, hires out the truck to A for a monthly hire of $ 3,000 per month from 1st January, 2012. The hire charges are to be adjusted, at the end of each year, against the amount due to A on account of principal and interest, any difference being settled in cash.
B, charges 20% depreciation (on the written-down-value method) on the truck. All payments are made as per the agreement. On 1st January 2015, the truck is sold by B to A for $ 15,000 in cash.
Show in B’s books, Truck Account, Interest Suspense Account and A's Account.
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