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1)To pay account payables as late as possible without damaging the firm's credit rating.
2)Turnover inventory as quickly as possible but avoid stockouts which might result in loss of sales or shutting down the 'production line'
3)Collect accounts receivable as quickly as possible without losing future sales because of high pressure collection techniques.
johnson mwenjera answered the question on December 4, 2017 at 13:17
- Write brief notes on( i) Hire purchase (ii) Credit sale (iii) Effects of goods repossessed on hire purchase transactions(Solved)
a) Write brief notes on
i) Hire purchase
ii) Credit sale
iii) Effects of goods repossessed on hire purchase transactions
b) Fiona Limited bought Motor Vehicle on hire purchase terms. The transactions involved
the following:
i) The cash price Sh.800,000
ii) Hire purchase interest 25%
iii) Deposit 20% of cash price
iv) 5 annual equal installments.
The purchase was effected on 1st January 2015.All payments were made. Depreciation is at a rate of 10% per annum on straight line.
Required:
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Hire purchase company account (4 marks)
Hire purchase interest account (3marks)
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Required:
Show the entries in ABC Ltd’s ledger for the year ended 31st December 2008. Ignore income tax. (6 Marks)
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