Reference no: EM132564031

Question - 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 -

(a) Calculate the hire purchase price.

(b) Calculate interest for each instalment.

(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.