(Solved):   Question 3 Progress Limited sells power generator sets on an instalment sales basis. The t ...

 

Question 3 Progress Limited sells power generator sets on an instalment sales basis. The terms of payment are as follows: Cash price: Deposit: Interest: Instalments: R1 500 per set 20% of cash price per set 20% per annum 35 monthly payments of R54 and a final payment of R30. The cost price per set amounted to R900, and 200 sets were sold during the year ended 30 June 2006. Instalments totalling R64 800 were received. Profit is regarded as realised in the year of sale, but finance charges are written off on the basis of the ratio of instalments received to total instalments. Financial Accounting II / © ICG / Page 62 Required (a) Show the following accounts: instalment sales debtors; instalment sales trading account; and interest suspense account (b) Show how instalment sales debtors will be reflected in the balance sheet at 30 June 2006.