Where a new asset is required in a business that is short of funds, the business may:
Leases can be either:
HIRE PURCHASE
Payment of deposit
Dr | Cr | |
Asset- cost | x | |
VAT | x | |
Bank | x |
Balance of cost on credit: (not to include interest charges)
Dr | Cr | |
Asset- cost | x | |
HP creditor | x |
Subsequent repayments
Dr | Cr | |
HP interest | x | |
HP creditor | x | |
Bank | x |