Chapter 26 Hire Puchase

The ownership of goods under hire purchase agreement belongs to the _____________

• seller

• purchaser

• seller and purchaser

• purchaser and financial institution

Under which of the following circumstances will the asset of hire purchase legally belong to the purchaser?

• When the deposit is paid

• When the hire purchase agreement is signed

• When the first instalment is paid

• When the final instalment is paid

Cash Price: RM 60,000

Deposit: RM 20,000

Interest: 10% p.a.

Payable: 24 monthly instalments

The instalment paid was RM_______

• 1,667.67

• 1,833.33

• 2,000.00

• 2,200.00

Cash Price: RM 2,200

Down Payment: RM 800

Instalment: 18 monthly instalments of RM 150 each.

The total interest on hire purchase was RM____.

• 1,300

• 800

• 500

• 300

Cash Price: RM 40,000

Deposit: 10% of the cash price

Interest: 8% p.a.

Payable: 5 years of equal monthly instalments

What was the hire purchase price???????

• RM 36,000

• RM 40,000

• RM 50,400

• RM 54,400

Cash Price: ??????????????

Down Payment: RM 8,000

Interest: 6% p.a.

Instalment: 50 monthly instalments of RM 1,200 each.

• RM 68,000

• RM 60,000

• RM 56,000

• RM 48,000

Which two of the following descriptions regarding hire purchase are true?

I. Interest is charged by seller on cash price

II. Hire Purchase Price = Cash Price + Total Interest

III. Once the deposit is paid, the ownership of goods is held by the buyer

IV. Instalment = (Amount To Be Financed + Total Interest) / Total Number Of Instalments

• I,II

• I,III

• II,IV

• III,IV

Which two of the following descriptions regarding hire purchase are true?

I. Interest is charged by seller on cash price

II. Hire Purchase Price = Cash Price + Total Interest

III. Once the deposit is paid, the ownership of goods is held by the buyer

IV. Instalment = (Amount To Be Financed + Total Interest) / Total Number Of Instalments

• I,II

• I,III

• II,IV

• III,IV

Cash Price: RM 8,100

Deposit: RM 2,430

Interest: 8% p.a.

Payable: 18 monthly instalments, commencing on 1 Sep 2003

What is the net balance of Hire Purchase Vendor account shown in the Statement Of Financial Position as at 31 December 2003

• RM 3,780

• RM 4,032

• RM 4,158

• RM 4,410

HP Vendor was settled in full, choose the correct double entry for unpaid interest in HP Interest Suspense account.

• Dr. HP Vendor

  Cr. HP Interest Suspense

• Dr. HP Interest

  Cr. HP Interest Suspense

• Dr. Profit and Loss

  Cr. HP Interest Suspense

• Dr. HP Interest Suspense RM 667

  Cr. Bank RM 667