Reference no: EM132908268

Question - On 01.10.2016, X purchased 5 Machines from Y for 10,00,000. Payment was to be made-20% down and the balance in four annual equal instalments of 2,50,000 each to be paid at the end of each year. X, writes off depreciation @ 20% p.a. on the original cost. On X 's failure to pay the third instalment, Y e-mailed X that on 01.04.2020 he will repossess 3 machines and will allow a credit for lower of the following:

(i) Value of Machines on the basis of 40% p.a. depreciation on WDV basis.

(ii) The amount paid against 3 machines less 50%.

X replied Ok. 01.04.2020 Y repossessed the machines as per mail.Y spent 6,000 on repairs of these machines and sold one of such machines for 70,000 on 30th June 2020. X follows financial year as its accounting year.

Required - Prepare Machinery Account and Hire Vendor's Account in the books of X and Hire Purchaser's Account and Goods Repossessed Account in the books of Y. Also Show the Items related to Hire Purchase in the Balance Sheet of X as at 31st March, 2020.