Answer:
1. Complete Repossession:
Under the circumstance the hire vendor closes the books of the Hire-Purchaser’s Account by transferring to Repossess Goods Account.
Similarly, the hire-purchaser also closes the account of Hire-Vendor Account by transferring to the balance of Asset Account.
2. Partial Repossession:
In the Books of the Purchaser:
In the case of partial repossession, however, there should be an agreement between the vendor and the purchaser relating to the valuation of goods repossessed. Under the circumstances, Vendor’s Account is debited and the Asset Account is credited with the agreed value of goods repossessed. Since, the entire goods are not repossessed, Asset Account will have a balance for the goods not repossessed which will be equal to the depreciated value of the assets not repossessed and, naturally, Vendor’s Account will show a balance which will represent the amount due to the purchaser.
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