Question
Download Solution PDFIn case of 'installment payment system', In the books of purchaser total interest receivable by the seller is credited to ______
This question was previously asked in
UP TGT Commerce 2019 Official Paper
Answer (Detailed Solution Below)
Option 1 : Interest Suspense Account
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UP TGT Hindi FT 1
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Detailed Solution
Download Solution PDFThe correct answer is Interest Suspense Account.
Key Points
- A credit sale system in which payments are made in instalments over time is known as an instalment payment system.
- In this method, the buyer receives both ownership and possession of the items at the time the contract is signed.
- The vendor cannot respond to the items while the instalment is being paid.
- In that circumstance, the vendor may only file a lawsuit against the customer to recoup unpaid debts.
Important PointsJournal Entries in the book of Buyer are as follows:
Date | Particulars | L.F | Dr. | Cr. |
1. | Asset A/c Dr. | |||
Interest Suspense A/c Dr. | ||||
To Vendor A/c | ||||
(on delivery for first year) | ||||
2. | Vendors A/c Dr. | |||
To Buyer A/c | ||||
(being Down payment made) | ||||
3. | Interest A/c Dr. | |||
To Interest Suspense A/c | ||||
(being interest due) |
Hence, the correct answer is Interest Suspense Account.
Last updated on May 6, 2025
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