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HIRE PURCHASE
- A system where the buyer agrees to pay for the commodity in
installment. The buyer obtains the possession of the article on the down payment (deposit) but
the title of ownership remains with the seller until the last installment is made .
CREDIT SALES/DEFFERED PAYMENT- Under this system the article becomes
the property of the buyer with the payment of the first installment. The
buyer is supposed to pay the remaining amount in installments.
(b) Advantages
Manufacturer.
- He is able to increase his volume of sales .
- Profit earned on hire purchase is higher than profit earned on cash basis
- Goods belong to the seller until the last installment is paid .
The buyer.
- He takes possession of goods immediately after down payment
- Installments to be made are predetermined enabling him to plan and budget for payment of
the amounts
- He is able to acquire goods he would not have afforded on cash terms.
- The buyer can possess more goods including expensive items.
Advantages of credit sale to:
i) The manufacturer:
- He is able to increase his volume of sales
- Profits realised are higher since customers must pay higher prices
- He can reclaim the amount due from the buyer under a court order.
ii) The buyer
- He is able to purchase expensive goods on credit
- Ownership of the article passes to the buyer after the first installment .
- He is able to plan on acquisition of certain goods.
Differences
Hire purchase Credit sale
- Goods can be repossessed if the - Goods cant be repossessed but the buyer can be sued for
buyer breaches the contract. damages
- Ownership remains with the seller - Ownership passes to the buyer after the first installment is
till the last installment is effected. made.
sharon kalunda answered the question on March 4, 2019 at 12:20
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Explain five diseconomies that may be suffered by firms due to large scale production.
Date posted: March 4, 2019. Answers (1)
- The following balance were extracted from the books of Charles & Sons Co.
as at May 31st 2002 .
Capital ...(Solved)
The following balance were extracted from the books of Charles & Sons Co.
as at May 31st 2002 .
Capital 600,000
Net profit 130,000
Plant fixtures 160,000
Equipment’s 100,000
Buildings 240,000
Office furniture 10,000
Stock 192,000
Cash 118,000
Debtors 158,000
Pre-paid expenses 22,000
Creditors 130,000
Outstanding expenses 20,000
Bank overdraft 110,000
Required :
(i) Prepare a balance sheet as at 31st may 2002
(ii) Calculate
(a) Working capital
(b) Current ratio
(c) Net profit as percentage to capital
Date posted: March 4, 2019. Answers (1)
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usually sold at a margin of 20%, what was the...(Solved)
The sales from Mambo stores for the year 1999 was Ksh 99,000. Given that goods are
usually sold at a margin of 20%, what was the gross profit for the year.
Date posted: March 4, 2019. Answers (1)
- Enter the following transaction into a cash book and balance it as at 20th March 1995.
March 2nd started business with Kshs. 28,000 of which Kshs....(Solved)
Enter the following transaction into a cash book and balance it as at 20th March 1995.
March 2nd started business with Kshs. 28,000 of which Kshs. 8000 was banked .
March 4. Bought stock from Nekesa worth Kshs 2000 and paid by cheque.
March 6. Paid wages in cash Ksh 4000.
March 10.Received a cheque for Kshs. 3000 from a debtor
March 20. Deposited cash in bank from cash till Kshs. 3000.
Date posted: March 4, 2019. Answers (1)
- The following is a demand/ supply schedule for kerosene. Draw a diagram to illustrateusing your own scale 5mksAlso find the equilibrium price / quantitiesPrice ...(Solved)
The following is a demand/ supply schedule for kerosene. Draw a diagram to illustrate
using your own scale 5mks
Also find the equilibrium price / quantities
Price--------Quantity Demanded Per day Per day--------Quantity Supplied Per day Per day
5--------60------------10
7--------50------------15
10-------40------------20
15-------35------------25
20-------30------------30
25-------25------------35
30--------20-----------40
Date posted: March 4, 2019. Answers (1)
- The following information was extracted from the books of Roadside kiosk as at
Sept 30th 1999:
Cash at hand ...(Solved)
The following information was extracted from the books of Roadside kiosk as at
Sept 30th 1999:
Cash at hand Shs. 30,000
Capital 170,000
Creditors 40,000
Stock 70,000
Purchases 150,000
Sales 205,000
Debtors 65,000
Motor vehicles 100,000
Prepare a trial balance as at 30th Sept 1999.
Date posted: March 4, 2019. Answers (1)
- The following information was extracted from the books of a trader :
Creditors ...(Solved)
The following information was extracted from the books of a trader :
Creditors sh 60,000
Cash at bank 20,000
Debtors 40,000
Stock 70,000
Calculate :
(i) Current ratio
(ii) Quick ratio
Date posted: March 4, 2019. Answers (1)
- a) The following balances were extracted from the books of spikes Ltd on 31st Dec 2001.
...(Solved)
a) The following balances were extracted from the books of spikes Ltd on 31st Dec 2001.
Shs.
Fixed Assets 42,000
Stock 48,000
Debtors 50,000
Bank overdraft 25,000
Creditors 40,000
Cash in hand 2,000
Capital 77,000
During the month of January, the following transactions took place.
a) Bought motor vehicle on credit valued at Kshs. 80,000 from General motors.
b) Withdrew sh. 28,000 for personal use.
Prepare a balance sheet as at 31st Jan 2002 for spikes Ltd.
Date posted: March 4, 2019. Answers (1)
- The following balances were extracted from the books of MM traders on 31st January 2002.
Item ...(Solved)
The following balances were extracted from the books of MM traders on 31st January 2002.
Item Amount
Sales 10,000
Purchases 6,000
Bank loan 2,000
Buildings 30,000
Machinery 40,000
Premises 60,000
Debtors 5,000
Creditors 4,000
Opening Stock 7,000
Capital 132,000
You are required to prepare a trial balance for MM traders as at 31st January 2002 from
the above information.
Date posted: March 4, 2019. Answers (1)
- The following balances relates to a business for the year ended 31st Dec 2000.
Capital as at 31st Dec 2000 ...(Solved)
The following balances relates to a business for the year ended 31st Dec 2000.
Capital as at 31st Dec 2000 170,000
Drawings for the year 5,000
Net profit for the year 5,000
Extra capital introduced 52,000
Purchases 20,000
i) Determine the amount of capital as at 1st Jan 2001.
ii) Calculate the Net profit ratio
Date posted: March 4, 2019. Answers (1)
- The following is a summary of transactions for Ryan Traders for the month of April 2002.
2nd April - Commenced business with shs. 12,000 in cash...(Solved)
The following is a summary of transactions for Ryan Traders for the month of April 2002.
2nd April - Commenced business with shs. 12,000 in cash and shs. 150,000 at the bank
3rd April - Made cash sales amounting to shs. 6,000
5th April - Received cash shs. 16,000 from a debtor
12th April - Paid for motor expenses shs. 7,000 in cash
13th April - Drew shs. 30,000 from bank for office use
15th April - Paid salaries in cash amounting to shs. 15,000
17th April - Bought furniture worth shs. 18,000 paying by cheque.
18th April - Paid expenses amounting to shs. 15,000 by cash
19th April - Cash sales of shs. 40,000 received by cheque
23rd April - Paid shs. 20,000 cash into the bank
25th April - Paid a creditor shs. 16,000 by cheque
You are required to prepare a two-column cash book for Ryan Traders for the month of April
2002.
Date posted: March 4, 2019. Answers (1)
- Mr Ryan had he following assets and liabilities on 30th April 2002.
...(Solved)
Mr Ryan had he following assets and liabilities on 30th April 2002.
Kshs
Cash at bank 23,100
Cash in hand 3,250
Debtors 45,300
Stock 48,200
Furniture 11,600
Motor-vehicle 65,000
Creditors 56,000
Bank loan 25,000
Calculate his capital
Date posted: March 4, 2019. Answers (1)
- The following information relates to demand and supply schedule for good.Price per unit (Kshs.) Quantity demanded ...(Solved)
The following information relates to demand and supply schedule for good.
Price per unit (Kshs.)--Quantity demanded---Quantity supplied.
70---------------100-----------------------1000
60-----------500-------------800
50-----------500-------------400
30----------800------------400
20----------900------------300
10---------1000-----------100
i) On the graph paper provided, draw the demand and supply curve on the same graph
and determine equilibrium price and quantity.
ii) What would happen if the price of good X was increased from shs. 50 to shs. 70.
Explain.
iii) What would happen if the price of good X was decreased from shs. 50 to shs. 10.
Explain.
Date posted: March 4, 2019. Answers (1)
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Date posted: March 4, 2019. Answers (1)
- The following information was drafted from the books of Rayrose college on 31st Jan 2002.
Item Amount ...(Solved)
The following information was drafted from the books of Rayrose college on 31st Jan 2002.
Item Amount (Kshs)
Opening stock 400,000
Sales 700,000
Closing stock 10,000
Purchases 150,000
Sales returns 20,000
Purchase returns 50,000
Salaries and wages 80,000
Rent 70,000
Income 80,000
Calculate:
a) Gross Profit
b) Net profit
c) Mark-up percentage
Date posted: March 4, 2019. Answers (1)
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Date posted: March 2, 2019. Answers (1)
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