Reference no: EM132551470

Kamal Bhd is a business selling second hand cars on hire purchase. On 1 January 2018, Kamal Bhd. sold a car to Adli for a cash price of RM154,200. A deposit of 20% of the cash price was required and the balance will be settled in seven semi-annually equal installments of RM21,000 each and a final payment of RM21,635. The first installment was due on 30 June 2018.

All installments were paid on due dates. On 1 July 2019, after the 3rd installment, Adli decided to terminate the hire purchase agreement. Kamal Bhd has agreed to give 25% rebate to Adli as full settlement.

Other information is as follows:

1. Adli preparation of account: 31 December annually.

2. Rate of hire purchase interest: 15% on outstanding balances calculated at half-yearly interest.

3. Depreciation rate: 20% per annum straight line method to be charge full in the year of acquisition and none in the year of disposal.

Required:

Question (a) Calculate the hire purchase price.

Question (b) Calculate interest for each instalment.

Question (c) Prepare the following accounts for the years ended 31 December 2018 and 2019 in the books of Adli:

i. Kamal Bhd

ii. Car account

iii. Accumulated Depreciation Car