Study Material Unit-3

SATHYABAMA
INSTITUTE OF SCIENCE AND TECHNOLOGY

BACHELOR OF COMMERCE
COURSE MATERIAL
SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014
UNIT III
FINAL ACCOUNTS OF BANKING COMPANIES
In India, banking companies are governed by the Banking Regulation Act 1949. Section
5 of the Act defines banking as “the accepting, for the purpose of lending or investment, of
deposits of money from the public repayable on demand or otherwise and withdrawal by
cheque, draft, and order or otherwise.
BUSINESS OF BANKING COMPANIES

In addition to the business of banking, a banking company may engage in any one
or more of the following business:
i. The borrowing, raising, or taking up of money
ii. The lending or advancing of money either upon or without security
iii. The drawing, making, accepting, discounting, buying, selling, collecting and dealing in
bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway
receipts, warrants, debentures, certificates, scripts and other instruments, and
securities whether transferable or negotiable or not.
iv. The granting and issuing of letter of credit, travelers cheques and circular notes
v. On receiving of all kinds of bonds, scripts or valuables on deposit or for safe custody or
otherwise.
vi. The buying, selling and dealing in bullion
vii. The collecting and transmitting of money and securities
viii. Contracting for public and private loans and negotiating and issuing the same.
ix. Carrying on and transacting every kind of guarantees and indemnity business .
x. Undertaking and executing trusts, etc…
SCHOOL OF MANAGEMENT STUDIES Page 51

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COURSE MATERIAL
IMPORTANT PROVISIONS OF THE BANKING REGULATION ACT 1949

1. Prescribed form
As per sec 29 to 33 of Banking Regulation Act , banking company has is required to
prepare a balance sheet in accordance with form A and profit and loss account with form
15 set out in third schedule .
2. Accounting Year
Banking company closes its accounts on 31st march every year.
3. Prohibition of trading
According to sec 8 ,a banking company cannot directly or indirectly deal in business of
buying and selling or bartering of goods, except realization of security given to or held
by it.
4. Statutory Reserve
As per Section 17, banking companies incorporated in India hall transfer every year at
least 25% of its profit before any dividend is declared to a Statutory reserve (Reserve
fund) until the amount of the reserve together with the security premium Account is
equal to the paid up capital.
5. Non – Banking Assets
These are the assets which are not used in the ordinary course of business of banking, but
they are such immovable and movable properties which come under the possession of the
banking company for recovering the amount due from customers
6. Cash Reserve Ratio (CRR)
Banks are required to maintain with the Reserve Bank of India a cash reserve of at least
3% of the total of its demand and time liabilities in India.
7. Statutory Liquidity Ratio (SLR)
Banks are also required to maintain at least 25% of the demand and time liabilities in the
form of liquid assets like cash, gold or unencumbered. SLR may vary in a range of 25% to
40%.

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COURSE MATERIAL
8. Minimum Capital and Reserves

In case of a banking company incorporated in India, the sum of its paid up capital and
reserves shall not be less than the amount mentioned below:
(a) If it has places of business in more than one state Rs.500000, and if any such place of
business is situated in Mumbai or Kolkata or in both, Rs.1000000.

(b) If it has all its places of business in one state, none of which is Mumbai or
Kolkata,Rs.100000 in respect of its principal place of business plus Rs.10000 for
each additional place of business in the same district plus Rs.25000 for each place of
business elsewhere in the state(the maximum amount required being Rs.500000).
9. Payment of dividend
Section 15 prohibits payment of dividend by any banking company until all its
capitalization expenses are written off .Capitalization expenses include preliminary
expenses, share selling expenses, brokerage etc.
10. Payment of commission , brokerage etc
As per Section 13, banking companies cannot pay directly or indirectly any commission,
brokerage or remuneration in any form exceeding 2.5% of paid up value of shares.
11. Loans And Advances
Section 20 of the banking regulation act , imposes certain restrictions on loans
granted by banking company No banking company shall
(a) grant any loans or advances on the security of its own shares, or
(b) enter into any commitment for granting any loan or advance to or on behalf of-
(i) Any of its Directors,
(ii) Any firm in which any of its Directors is interested as Partner, Manager, Employee or
Guarantor, or
(iii) Any company in which directors of the banking company is a Director, Managing Agent,
Manager, Employee or Guarantor or in which he holds substantial interest, or
(iv) Any individual with whom any of its Directors is a partner or guarantor.
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COURSE MATERIAL
The accounting system of a banking company is different from that of a trading

or manufacturing company. The main features of a bank’s accounting system are as follows:
1. Entries in the personal ledgers are made directly from the vouchers
2. From such entries in the personal ledgers each day summary sheets in total are
prepared which are posted to the control accounts in the general ledger.3. The general
ledger’s trial balance is extracted and agreed every day.
4. All entries in the personal ledgers and summary sheets are checked by persons other
than those who have recorded entries. It helps in detection of mistakes.
5. A trial balance of detailed personal ledgers is prepared periodically and gets agreed
with the general ledger control accounts.
6. Two vouchers are prepared for every transaction not involving cash.
BOOKS MAINTAINED BY BANKS
1. Receiving Cashier’s Counter Cash Book.
2. Paying Cashier’s Counter Cash Book.
3. Current Accounts Ledger.
4. Saving Bank Accounts Ledger.
5. Fixed Deposit Accounts Ledger.
6. Investment ledger.
7. Bills Discounted and Purchased Ledger.
8. Loan Ledger.
9. Cash Credit Ledger.
10. Customers’ Acceptances, endorsements and Guarantee Ledger.
11. Recurring Deposits Accounts Ledger, etc.
The Slip System
This is not a system of book keeping, but a method of rapidly posting entries to books
kept on double entry system. In this system, posting is made from slips prepared inside the
organization itself or from slips filled in by its customers.
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COURSE MATERIAL
Advantages of Slip system

1. It makes accounts reliable.
2. Slips are the basis of auditing.
3. The bank saves a lot of clerical labour as most of the slips are filled in by its customers.
4. There is no need for keeping subsidiary books.
Disadvantages of Slip system

1. Slips may be lost, destroyed or misappropriated as these are loose.
2. In the absence of subsidiary books, books cannot be verified.
3. It is very difficult and expensive to keep date wise record of a large number of slips.
4. Customers feel difficulty on account of slip system.
Final Accounts of Banks

As per Section 29, a banking comp[any incorporated in India, is required to prepare, at
the end of each accounting year, a Balance sheet and profit and Loss Account as on the last
working day of the year.
Profit and Loss Account
A banking company is required to prepare its Profit and Loss Account according to Form
B in the Third Schedule to the Banking Regulation Act, 1949. Form B is given as follows:

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COURSE MATERIAL
PROFIT & LOSS A/C (FORM “B”)
Current Previous
Schedule
Particulars Year year
No.
Rs. Rs.
I. Income:
Interest earned 13
Other income 14
Total
II. Expenditure :
Interest expended 15
Operating expenses 16
Provisions and contingencies
Total
III Profit /Loss :
Net Profit/ Loss For the year
Profit/ Loss brought forward
Total
Iv. Appropriations:
Transfer to statutory reserves
Transfer to other reserves
Transfer to government/ Propose Dividend
Balance carried over to Balance Sheet
Total

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COURSE MATERIAL
SCHEDULE 13 – INTEREST EARNED
Current year Previous year

Particulars
Rs. Rs.
I. Interest/ discount on advances/bills
II. Income on Investments
III. Interest on balances with RBI and other
Inter bank fund.
IV. Others
Total
SCHEDULE 14- OTHER INCOME

Particulars
Rs. Rs.
I. Comission, Exchange and Brokerage
II. Profit on sale of investment
Less: Loss on sale of investment
III. Profit on revaluation of investment
Less: Loss on sale of revaluation
IV. Profit on sale of other Assets
Less: Loss on sale of other assets
V. Income earned by way of dividend
VI. Miscellaneous income
Total

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COURSE MATERIAL
SCHEDULE 15- INTEREST EXPENDED

Particulars
Rs. Rs.
I. Interest on deposits
II. Interest on Reserve Bank of India/ inter bank
borrowings
III. Others
Total
SCHEDULE 16- OPERATING EXPENSES

Particulars
Rs. Rs.
I. Payments to and provisions for employees
II. Rent, taxes and lighting
III. Printing and stationary
IV. Advertisement and publicity
V. Depreciation on bank’s property
VI. Directors’ fees, allowances and expenses
VII. Auditor’s fees, allowances and expenses
VIII. Law charges
IX. Postages, telegrams, telephones, etc
X. Repairs and maintenance
XI. Insurance
XII. Other expenditure
Total

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COURSE MATERIAL
BALANCE SHEET (FORM ‘A’)
Schedule Current Year Previous year

Particulars
No. Rs. Rs.
Capital and Liabilities:

Capital 1
Reserve and Surplus 2
Deposits 3
Borrowings 4
Other liabilities and Provision 5
Total
Assets:
Cash and balance with RBI 6
Balance with banks and Money at call short notice 7
Investments 8
Advances 9
Fixed Assets 10
Other Assets 11
Total
Contingent Liabilities 12
Bills for collection
SCHEDULE 1- CAPITAL
Particulars
Rs. Rs.
I. For Nationalized banks capital
II. For banks incorporated outside India capital
III. For other banks capital
Less: Calls unpaid
Total

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COURSE MATERIAL
SCHEDULE 2- RESERVE AND SURPLUS
Current Previous
Particulars year year
Rs. Rs.
I. Statutory Reserves
Opening Balance
Additions during the year
Deductions during the year
II. Capital Reserves
Opening Balance
III. Share Premium
Opening Balance
IV. Revenue & Other Reserves
Opening Balance Additions during the year
V . Balance in Profit and Loss Account
Total (I+II+III+IV+V)
SCHEDULE 3- DEPOSITES
Particulars
Rs. Rs.
A.I. Demand Deposits
(i) From Banks
(ii) From Others
II. Saving Bank Deposits
III. Term Deposits
B. (i) Deposits of branches in India
(ii) Deposits of branches outside India
Total

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COURSE MATERIAL
SCHEDULE 4-BORROWINGS

Particulars
Rs. Rs.
I. Borrowings in India
(i) Reserve Bank of India
(ii) Other banks
(iii) Other institutions and agencies
II. Borrowings outside India
Total
SCHEDULE 5-LIABILITIES AND PROVISION

Particulars
Rs. Rs.
I. Bills payable
II. Inter‐office adjustments (net)
III. Interest accrued
IV. Others
Total
SCHEDULE 6- CASH AND BALANCES WITH RBI

Particulars
Rs. Rs.
I. Cash in hand
(including foreign currency notes)
II. Balances with Reserve Bank of India
(i) In current accounts
(ii) In other deposit accounts
Total

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COURSE MATERIAL
SCHEDULE 7 BALANCES WITH BANK AND MONEY AT CALL SHORT NOTICE

Particulars
Rs. Rs.
I. In India
(i) Balances with banks
(a) In current accounts
(b) In other deposit accounts
(ii) Money at call and short notice
(a)With banks
(b) With other institutions
Total (i) and (ii)
II. Outside India
(i) In Current assets
(ii) In other deposit accounts
Total (I & II)
SCHEDULE 8- INVESTMENTS

Particulars
Rs. Rs.
I. Investments in India in
(i) Government securities
(ii) Other approved securities
(iii) Shares
(iv) Debentures and bonds
(v) Subsidiaries and/or joint ventures
(vi) Others (to be specified) Total
II. Investments outside India
(i) Government securities & Others
Total

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COURSE MATERIAL
SCHEDULE 9 - ADVANCES

Particulars
Rs. Rs.
A. (i) Bills purchased and discounted
(ii) cash credits, overdrafts and loans repayable
(iii) Term loans
(i) B.(i)Secured by tangible assets
(ii)covered by bank/Government guarantees
(iii) unsecuredTotal
C. Advances in India
(i)priority sectors
(ii)public sector
(iii) banks
D. Advance outside India
Total
SCHEDULE 10 –FIXED ASSETS

Particulars
Rs. Rs.
I. Premises
At cost on 31st march of the year
Addition during the year
Depreciation to date
II. Other fixed Assets (including furniture’s)
At cost on 31st March of the Year
Depreciation to date Total

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COURSE MATERIAL
SCHEDULE 11 – OTHER ASSETS

Particulars
Rs. Rs.
I. Inter‐office adjustments (net)
II. Interest accrued
III. Tax p[aid in advance/ tax deducted at source

IV. Stationery and stamps
V. Non‐banking assets acquired in satisfaction of
claims
VI. Others
TOTAL
SCHEDULE 12 - CONTINGENTLIABILITIES

Particulars
Rs. Rs.
I. Claims against the bank not acknowledged as
Debts
II. Liability for partly paid investments
III. Liability on account of outstanding forward
exchange contracts
IV. Guarantees given on behalf of constituents
(i) In India
(ii) Outside India
Total

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COURSE MATERIAL
1. From the following particulars, prepare a profit and loss a/c of ABC Ltd., for the year
ended 31.3.2014
Particulars Rs .(in ‘000) Particulars Rs. (in ‘000)

Interest on loans 260 Interest on cash credits 225
Interest on fixed deposits 280 Rent and taxes 20
Rebate on bills discounted 50 Interest on overdrafts 56
Commission charged to Directors’ and auditor’s fees 4
customers 9 Interest on savings bank
Establishment expenses 56 accounts 70
Discount on bills discounted 200 Postage and telegrams 2
Interest on current accounts 45 Sundry charges 2
Printing and advertisements 3
2. From the following information relating to Vilas bank Ltd., prepare the profit & loss A/C for
the year ended 31st March ,2013
Particulars Rs .(in ‘000) Particulars Rs. (in ‘000)

Rent received 72,000 Salaries and allowances 2,18,800
Exchange and commission 32,800 Postage 5,600
Interest on fixed deposits 11,00,000 Sundry charges 4,000
Interest on savings bank A/Cs 2,72,000 Director’s & Auditor’s fees 16,800
Interest on overdrafts 2,16,000 Printing 8,000
Discount on bills discounted 7,80,000 Law charges 3,600
Interest on current accounts 1,68,000 Locker rent 1,400
Interest on cash credits 8,92,000 Transfer fees 2,800
Depreciation on bank property 20,000 Interest on loans 10,36,000

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COURSE MATERIAL
3. Prepare the profit & loss A/C of Sriram bank Ltd., for the year ended 31 st March ,2013
Particulars Rs.
Interest and discount received 36,95,738

Commission, exchange and brokerage 2,00,000
Directors’ fees and allowances 55,000
Postage and telegrams 62,313
Stationery 17,625
Preliminary expenses 15,000
Interest paid on deposits 20,32,542
Rent received 55,000
Salaries and allowances 1,75,000
Rent and taxes paid 87,973
Profit on sale of investments 2,00,000
Depreciation on building 27,375
Audit fees 5,000
Additional information:
1) A customer to whom a sum of Rs.10,00,000 has been advanced has become insolvent.
It is expected that only 50% can be recovered from his private estate.
2) For the remaining debts, a provision of Rs.1,50,000 was necessary.
3) Rebate on bills discounted as on 31.12.12 Rs.12,000 and on 31.3.2013 Rs. 16,000.
4) Provide Rs.6,50,000 for taxation.
5) Write of all preliminary expenses.

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COURSE MATERIAL
4.From the following information, prepare profit & loss Account of Swadesh bank Ltd., for the
year ended 31st March ,2014
Particulars Rs. Particulars Rs.

in ‘000’ in ‘000’
Interest on fixed deposits 430 Transfer fees 2
Interest on loans 650 Provident fund contribution 12
Discount on bills discounted 415 Local committee fees and allowance 10
Interest on over drafts 210 Audit fees 12
Interest on cash credits 410 Printing and stationery 4
Interest on savings bank deposits 125 Loss on sale of government securities 5
Salaries and allowances 140 Loss on sale of furniture 2
Rent, taxes, insurance and lighting 40 Postage and telegrams 2
Locker rent 5 Depreciation 10
Repairs to bank property 2 Advertisement 4
Commission and brokerage 24 Legal charges 3
Director’s fees and allowances 25
1) Rebate on bills discounted on 31st March ,2013Rs.19,000.
2) Rebate on bills discounted on 31st March ,2014Rs. 26,000.
3) Bad debts to be written off Rs.40,000.
4) Provide for taxation Rs.50,000.
5. From the following information prepare the profit and loss account of ABC Bank Ltd. for
the year ended on 31st March ,2014 in the prescribed form.
Bad debts to be written off amounted to Rs.40,000. Provision for taxation may be made @
55%. Balance of profit from last year was Rs.1,20,000. The directors have recommended a
dividend of Rs.20,000 for the shareholders.

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COURSE MATERIAL
Particulars Rs.
Interest on loan 2,59,000

Interest on fixed deposits 2,75,000
Commission 8,200
Establishment 54,000
Discount on bills discounted 1,95,000
Interest on cash credit 2,23,000
Interest on current account 42,000
Rent and taxes 18,000
Interest on over draft 1,54,000
Director’s fees 3,000
Auditor’s fees 1,200
Interest on savings bank deposits 68,000
Postage and telegrams 1,400
Printing and stationery 2,900
Sundry charges 1,700
6.From the following , you are required to prepare the profit and loss Account and the
balance sheet of New Bank ltd., as on 31st march 2014.
Particulars Rs. In ‘000 Rs. In ‘000

Issued capital:
20,000 shares of Rs.100 each - 2000
Money at call and short notice 800 -
Reserve fund - 700
Cash in hand 650 -
Deposits - 2500
Cash at bank 950 -

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COURSE MATERIAL
Borrowing from SBI - 500

Investments in government securities 900 -
Secured loans 1500 -
Cash credits 500 -
Premises less depreciation 580 -
Furniture less depreciation 120 -
Rent 5 60
Interest and discount - 800
Commission and brokerage - 70
Interest paid on deposits 300 -
Salary and allowances paid to staff 150 -
Interest paid on borrowings 50 -
Audit fees 10 -
Directors’ fees 8 -
Non-banking assets 80 -
Depreciation on bank property 13 -
Printing 3 -
advertisement 1 -
Stationery 5 -
Postage and telegrams 2 -
Other Expenses 3 -
Adjusments:
1. Provide Rs.20,000 for doubtful debts.
2. Provide Rs.10,000 on bills discounted but not matured on 31.3.2014
3. Acceptances and endorsements on behalf of customers amounting to Rs.4,00,000.
4. Provide Rs.60,000 for taxes.

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COURSE MATERIAL
7. The following is the trail balance of Roy Bank Ltd., as on 31.3.2014

Particulars Debit Rs. Credit Rs.
Share capital:7,500 shares of Rs.100 each - 7,50,000
Loans and advances 80,20,000 -
Bank premises 5,32,500 -
Government securities 15,30,000 -
General reserve - 4,50,000
Deposits - 96,46,000
Interest and discounts - 8,00,000
Interest on deposits and borrowings 2,00,000 -
Balance with other Banks 1,00,500 -
Money at call and short notice 85,500 -
General expenses 82,500 -
Rent ,rates and taxes 6,900 -
Director’s fees 4,200 -
Auditor’s fees 1,200 -
Bills discounted 90,000 -
Furniture (Depn. Upto 1.1.2014 Rs.20,000) 80,000 -
Borrowings from other banks - 1,05,000
Salaries and allowances 85,500 -
Computer 35,000 -
Profit &Loss A/c 1.1.14 - 37,500
Miscellaneous income - 300
Commission - 10,000
Interim dividend 30,000 -
Cash in hand and with RBI 9,15,000 -
1,17,98,800 1,17,98,800

SATHYABAMA
COURSE MATERIAL
Considering the following information furnished, prepare profit and loss Account for the year
ended and balance sheet as on that date in the proper forth.
1. Bills worth Rs.50,000 were received for collection.
2. Interest accrued on investment Rs.12,000.
3. Rebate on bills discounted Rs.15,000.
4. Debts amounting to Rs.65,000 were doubtful and provision is to be made for the same.
8.The following are the balances of ABN Bank Ltd., for the year ended 31.3.2014
Particulars (Rs. in ‘000)

Interest on loans 518
Interest on fixed deposits 550
Commission received 16
Salaries and allowances 108
Discount on bills discounted 292
Rebate on bills discounted 98
Interest on cash credits 446
Interest on current accounts 84
Rent and taxes 36
Interest on overdrafts 308
Director’s fees 6
Auditor’s fees 2
Interest on saving bank deposits 136
Postage and telegrams 3
Printing and stationery 6
Locker rent 2
Transfer fees 1
Depreciation on banks properties 10
Sundry charges 4
Adjustments:
1) Provision for bad debts to be made Rs.80,000.
2) Provision for income tax required Rs.3,00,000.
From the above information, prepare the profit and loss Account of the bank for the year
ended 31.3.14.

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COURSE MATERIAL
9. From the following balance of Saraswathi Bank Ltd., as on 31.3.2014, prepare its balance
sheet in the prescribed form.
(Rs. In
Particulars
‘000)
Paid up share capital (shares of Rs.100 each fully paid) 2,000
Bills discounted 1,800
Reserve fund 770
Cash credits 2,000
Overdrafts 800
Unclaimed dividends 10
Loans 4,600
Current deposits 3,800
Furniture 40
Profit and loss A/c (Cr) 220
Stamps and stationery 10
Cash in hand 500
Cash with reserve bank 1,300
Branch adjustment (Dr) 170
Investment 950
Loan (cr) 1,200
Recurring Deposits 1,000
Fixed Deposits 2,000
Cash Certificates 1,000
Contingency reserve 170
Adjustments:
1) Rebate on bills discounted Rs.10,000.
2) Provide Rs.80,000 for doubtful debts.
3) Banks acceptance on behalf of customers were Rs.6,59,000.

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COURSE MATERIAL
QUESTIONS
PARTA
1. Define Banking.
2. What is statutory reserve? How is it created?
3. What are non banking assets?
4. Define Balance sheet
5. What is cash reserve ratio?
6. What is statutory liquidity ratio?
7. State the different items shown under “other Liabilities and provisions”.
8. Mention the major kinds of deposits accepted by bank under schedule 3.
9. What do you mean by contingent liabilities?
10. What is rebate on bills discounted?
PART B
11. Define banking and briefly discuss the provisions of banking regulations act.
12. Draft profit and loss account of a banking company in prescribed form as per format of
banking companies Act and give various schedules.
13. Explain the various schedules prepared by a commercial bank.
14. Draft balance sheet of a banking company in prescribed form as per schedule 3 of
banking companies Act and give various schedules.
15.From the following particulars relating to the Punjab bank Ltd. Ascertain the profit
balance carried over to the balance sheet:
Particulars Rs.
Net Profit for the year 1,28,000
Profit brought forward from the previous year 1,20,000
Transfer to Statutory Reserve 25 %
Transfer to Other reserve 10 %
Transfer to proposed dividend 20,000

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COURSE MATERIAL
16. From the following balances prepare profit and loss account of Adarsh bank Ltd for the year
ending 31.3.15
Particulars Rs.
Interest on loan 5,00,000
Interest on cash credit 6,00,000
Interest on overdrafts 3,00,000
Interest on fixed deposit 8,00,000
Interest on savings deposits 1,10,000
Interest on current accounts 70,000
Income on investments 15,000
Interest balance with RBI 25,000
Commission, exchange and brokerage 40,000
Miscellaneous income 30,000
Rent, taxes and lighting 25,000
Printing and stationery 15,000
Advertisement and publicity 60,000
Depreciation on bank’s property 10,000
Salaries to staff 1,40,000
Director fees 30,000
Audtior fees 10,000
Law charges 7,000
Postage and telegram 3,000
Repairs and maintenance 5,000
Insurance 12,000
Other expenditure 5,000
Prepare the necessary schedules.

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COURSE MATERIAL
17. From the following particulars, prepare the profit and loss account of Chennai Bank
Ltd, for the year ending 31st march 2015
Particulars (Rs. In 000)

Interest on deposits 3,200
Commission(Cr) 100
Interest on loans 2,490
Sundry charges 100
Rent and taxes 200
Establishment 500
Discount on bill discounted 1,490
Interest on overdrafts 1,600
Interest on cash credits 2,320
Auditor’s fees 35
Director fees 16
Bad debts to be written off 300
18. From the following Leger balance of peoples bank Ltd., Prepare profit and Loss A/c
Particulars Rs.
Interest paid on deposits 1,60,520
Commission exchange and brokerage 44,240
Interest received 5,32,260
Salary and provident fund 40,000
Profit on sale of fixed assets 30,000
Printing and stationary 10,000
Postage and telephone 20,000
Note Provide for taxation Rs. 20,000 and rebate on bills discounted was Rs.14,380

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COURSE MATERIAL
19. The following balances are extracted from the books of World Bank Ltd for the year ending
31.3.15
Particulars Rs.
Interest received 15,50,730
Commission, exchange and brokerage 1,46,500
Issued and subscribed capital 20,00,000
Statutory reserve fund 5,00,000
Retained profit as on 1.4.96 3,00,000
Income on investments 2,50,000
Profit on revaluation of investments 1,40,000
Miscellaneous income 25,000
Income earned by way of dividends 50,000
Profit on sale of investments 15,000
Interest on deposits 10,85,090
Interest on bank borrowings 1,42,360
Salary 2,40,000
Rents and taxes paid 15,000
Depreciation on bank properties 1,10,000
Insurance 60,000
Other expenditure 40,000
Printing and stationary 20,000
Law charges 15,000
Audit fees 10,000
Advertising and publicity 42,000

SATHYABAMA
COURSE MATERIAL
Rebate on bills discounted on 31.3.96 was Rs.50000 and on 31.3.97 was Rs.60000
Provision for taxation may be made at 505
The proposed dividend is 10% on paid up capital
The total debts from a customer is Rs.1500000 and the amount realized is only
Rs.1200000
The auditors recommended for further bad debts of Rs.200000
You are required to prepare profit and loss account and the required schedules.
20. From the following Trial balance, prepare a Balance sheet of Indian Bank Ltd as on 31.3.15
Rs. In Rs in
Particulars
Lakhs Lakhs
Land and building 25 -
Plant and machinery 30 -
Furniture 12 -
Cash in hand 10 -
Cash with RBI 5 -
Cash With other banks 8 -
Money at call 200 -
Gold 15 -
Government securities 25 -
Term loan 60 -
Cash credits 80 -
Share capital - 120

Statutory reserve - 15
Net profit before appropriation - 60
P&L A/c - 40
Fixed deposit - 60
Savings deposit - 70
Current accounts 15 80
Bills payable - 10

SATHYABAMA
COURSE MATERIAL
Borrowings from other banks - 30

Total 485 485
Additional information: Acceptances and endorsements Rs.215000, Bills for collection

Rs.125000, Claims against the bank not acknowledged as debts Rs.75000
21. The following are the balances of City Bank Ltd., you are required to prepare the Profit
& Loss A/c. & the Balance Sheet as at 31.03.15
Particulars Debit Credit
Share capital: 2000 Equity shares of Rs.500 each Rs.150 - 3,00,000
Bad debts written off 12,500 -
Reserve fund investments 2,00,000 -
General expenses 69,500 -
Current Accounts - 20,00,000
Interest paid on deposits 16,000 -
Deposit accounts - 7,00,000
Profit & Loss A/c. - 25,000
Acceptances for customers 1,50,000 -
Discount received - 58,000
Endorsement and Guarantee 7,500 -
Commission & Exchange - 5,000
Cash on hand 25,000 -
Interest Received - 25,000
Cash in RBI 2,00,000 -
Endorsement and Guarantee - 7,500
Owings by foreign correspondents 20,000 -
Customers liability for acceptances - 1,50,000
Borrowings from banks - 6,50,000
Loans and Advances 15,50,000 -
Investments 10,00,000 -
Bills discounted 6,50,000 -
Premises 2,20,000 -
Statutory Reserve - 2,00,000
Total 41,20,500 41,20,500
Other Information:
i. Interim dividend paid during the year Rs.20000
ii. Provide for rebate on bills discounted Rs.6000 and for income tax reserve Rs.15000.

SATHYABAMA
COURSE MATERIAL
22. From the following Trial Balance of Canara Bank Ltd., prepare the Profit & Loss A/c. for
the year ending 31.03.15 & Balance Sheet as on that date
Particulars Debit Credit
Paid capital - 10,00,000
Money at call and short notice 4,00,000 -
Reserve fund - 2,50,000
Cash on hand 5,00,000 -
Cash with RBI 2,00,000 -
Fixed deposits - 12,00,000
Loans, cash creditors etc 15,00,000 -
Investments 2,00,000 -
Borrowings from City Bank - 3,00,000
Pension fund - 1,00,000
Unclaimed Dividend - 50,000
Furniture less depreciation 80,000 -
Premises less depreciation 3,20,000 -
Rent - 10,000
Interest & discounts - 6,00,000
Commission received - 60,000
Salaries and allowances 90,000 -
Interest on deposits and borrowings 3,10,000 -
Audit fees 8,000 -
Directors fees 7,000 -
Depreciation on Bank property 9,000 -
Printing & stationery 4,000 -
Other expenses 2,000 -
Profit & loss A/c. 01.04.14 - 60,000
Total 36,30,000 36,30,000
Other Information:
i. Provide Rs.5000 for rebate on bills discounted
ii. Provide Rs.22000 for bad debts
iii. Bills for collection on behalf of customers Rs.50000
iv. Provide for taxation Rs.4000.

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SATHYABAMA

INSTITUTE OF SCIENCE AND TECHNOLOGY

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

FINAL ACCOUNTS OF BANKING COMPANIES

BUSINESS OF BANKING COMPANIES

SCHOOL OF MANAGEMENT STUDIES Page 51

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

IMPORTANT PROVISIONS OF THE BANKING REGULATION ACT 1949

SCHOOL OF MANAGEMENT STUDIES Page 52

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

8. Minimum Capital and Reserves

business is situated in Mumbai or Kolkata or in both, Rs.1000000.

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

The accounting system of a banking company is different from that of a trading

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

Advantages of Slip system

Disadvantages of Slip system

Final Accounts of Banks

Profit and Loss Account

SCHOOL OF MANAGEMENT STUDIES Page 55

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

PROFIT & LOSS A/C (FORM “B”)

SCHOOL OF MANAGEMENT STUDIES Page 56

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

SCHEDULE 13 – INTEREST EARNED

Current year Previous year

SCHEDULE 14- OTHER INCOME

Current year Previous year

SCHOOL OF MANAGEMENT STUDIES Page 57

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

SCHEDULE 15- INTEREST EXPENDED

Current year Previous year

SCHEDULE 16- OPERATING EXPENSES

Current year Previous year

SCHOOL OF MANAGEMENT STUDIES Page 58

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

BALANCE SHEET (FORM ‘A’)

Schedule Current Year Previous year

Capital and Liabilities:

Bills for collection

SCHOOL OF MANAGEMENT STUDIES Page 59

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

SCHEDULE 2- RESERVE AND SURPLUS

SCHOOL OF MANAGEMENT STUDIES Page 60

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

Current year Previous year

SCHEDULE 5-LIABILITIES AND PROVISION

Current year Previous year

SCHEDULE 6- CASH AND BALANCES WITH RBI

Current year Previous year

SCHOOL OF MANAGEMENT STUDIES Page 61

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

SCHEDULE 7 BALANCES WITH BANK AND MONEY AT CALL SHORT NOTICE

Current year Previous year

Current year Previous year

SCHOOL OF MANAGEMENT STUDIES Page 62

SUBJECT : CORPORATE ACCOUNTING II SUBJECT CODE : SBAX1014

Current year Previous year

SCHEDULE 10 –FIXED ASSETS

SCHOOL OF MANAGEMENT STUDIES Page 63