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Hamilton - Case A - 5 PDF

1. Hamilton Ltd. had total sales of Rs. 1,74,90,000 for the year ending March 31, 2019. Accounts receivable were Rs. 15,40,000 and Rs. 48,800 were written off as bad debts. A provision for bad debts of 4% of receivables must be maintained. 2. The financial controller needs to analyze the impact of these transactions on accounts receivable, provision for bad debts, and the profit and loss account for the year ending March 31, 2019. He must also show how the items will appear on the balance sheet and profit and loss account.

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Jayash Kaushal
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2K views2 pages

Hamilton - Case A - 5 PDF

1. Hamilton Ltd. had total sales of Rs. 1,74,90,000 for the year ending March 31, 2019. Accounts receivable were Rs. 15,40,000 and Rs. 48,800 were written off as bad debts. A provision for bad debts of 4% of receivables must be maintained. 2. The financial controller needs to analyze the impact of these transactions on accounts receivable, provision for bad debts, and the profit and loss account for the year ending March 31, 2019. He must also show how the items will appear on the balance sheet and profit and loss account.

Uploaded by

Jayash Kaushal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Hamilton Ltd.

(A)
Mr. Deepak Dalai, the financial controller of Hamilton Ltd. was going through the
Balance Sheet of his company as on 31st March, 2018 (refer Exhibit 1). While
finalizing the financial statements for the current year ended 31 st March 2018, he
felt he should review certain transactions enumerated below:

1. Total sales (all credit sales) during the year 2018-19 amounted to Rs.
1,74,90,000. In addition, Hamilton had confirmed orders worth Rs. 37,65,000
that would be executed in 2019-20. Also prospects for Rs. 25,00,000 worth
of orders were in advanced stages of negotiation, with closure expected
very soon.
2. Payment received during the year was Rs. 1,67,70,000
3. During the year accounts receivable amounting to Rs. 48,800 were
uncollectible and were to be written off as bad debts.
4. A provision for bad debts is to be maintained at 4% of Receivables as on
31st March, 2018.

You are required to help Mr. Deepak.

1. Analyse the effect of the transactions on accounts receivables and provision


for bad debts and the amount written off through Profit and Loss account.
Calculate the same as of 31st March 2019.
2. Show how the various items will appear in the Balance Sheet and Profit and
Loss account for the current year.
Hamilton Ltd.
Balance Sheet as on 31st March 2018
Equities and Liabilities Rs.
1. Shareholder’s Funds
Equity Capital 1510470
Retained Earnings 6032110
7542580
2 Non-Current Liabilities
Long term debt 1210000
3 Current Liabilities
Accounts payable 720000
Accrued expenses 250000
Current portion of debt 110000
1080000
Total Equity and Liabilities 9832580
Assets
1 Non-current Assets
Building 3210000
Less: Accumulated depreciation 942500 2267500
Machinery 5650000
Less: Accumulated depreciation 2481500 3168500
Furnace and Fitting 840000
Less: Accumulated depreciation 232000 608000
Long term Investments 750000
2. Current Assets 6794000
Cash and Cash equivalents 980000
Account Receivables 1540000
Less: Provisions for bad debts 76200 1463800
Inventories 594780
3038580

Total Assets 9832580

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