Banking Company Final Accounts

TOPICS COVERED

● Calculation of Rebate
● Classification of Assets & Calculation of provisions.
● Income Recognition Policy
● Profit & Loss statement
● Balance Sheet

Calculation of Rebate

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1. The following is an extract from the Trial Balance of Money-Penny Bank Ltd. as on 31

March,2018

Particular Dr. Cr.

Bills Discounted 65,50,000
Rebate on Bills discounted not Yet due (1-4-2017) 35,250
Discount Received 1,98,500

Date of Bill ` Period(Months) Discount @ % p.a.

Jan, 15 2018 12,50,000 4 9
Feb, 05 2018 8,00,000 4 12
Feb,15 2018 5,00,000 2 10
March,20 2018 3,25,000 3 12
Calculate (i)the amount of Discount received to be credited to the Profit and loss Account.
(ii)Pass necessary journal entries

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2. On 31 March 2019, the Surat Bank Ltd. held the following bills:

Date of Bill 2019 Amount ` Term Discounted @ % p.a.

 (Days)(not
including
grace days)
Feb. 11 60,000 73 09
Feb. 21 20,000 90 12
March 09 35,000 60 06
Calculate the Rebate of Bills Discounted & give the necessary journal entry for recording rebate.
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3.The following is an extract from the Trial Balance of Dream
Bank Ltd. as on 31st March 2006:

You are required to find out the amount of discount to be

credited to the Profit and Loss Account for the year ending
31st March 2006, and pass journal entries. The rate of
discount may be taken at 10% p.a.

Income Recognition Policy

1. From the following details of Vaisya Bank Ltd. Calculate the amount of interest to be credited
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to Profit and Loss Account for the year ended 31 March, 2018
 Interest Interest Interest
Accrued received Accrued
(1/04/17) (2017-2018) (31-3-2018)
` in Crores ` in Crores ` in Crores
Performing Assets
Loans 350 960 480
Bills purchased and Discounted 560 1400 670
Cash Credit 785 3600 850
Non Performing Assets
Loans 2500 600 1950
Bills Purchased and Discounted 1850 700 2050
Cash Credit 2980 900 1800

2.Calculate the Interest Income to be recognized for the year ending 31-3-18 of Delhi bank Ltd

Particular Total Earned On NPA

Earned and Collected
Interest on cash credit 1,860 640 300=1860-640+300
Interest on term loan 2,040 860 420
Interest on Overdraft 1,420 480 240

Profit & Loss

1. From the following information, prepare Profit & Loss A/c of T J P Bank Ltd. for the year ended
on 31st March 2018 along with necessary schedules.
 ​
Particulars `In Lakh
Interest on Loans 13 400
Interest on Fixed Deposits15 275
Commission14 10
Exchange & Brokerage14 20
Salaries & Allowances16 150
Discount on bills (Gross)13 152
Interest on Cash Credit13 240
Interest on temporary overdraft in Current A/c13 40
Interest on Savings bank deposits15 86
Postage, Telegram & Stamps 10
Printing & Stationery 20
Sundry Expenses 52
Rent 15
Taxes & Licenses 10
Audit Fees 10
Share Capital 100
Salary of Managing Director16 30
Additional Information:-
1. Provide for rebate on bills discounted `30 lakhs
2. Provision for Income tax is to be made @ 40%
3. Interest of `4 lakhs on doubtful debts(not received) was wrongly credited to
interest on loans A/c.-Income Recognition Policy

2. Prepare Profit & loss A/c for ABC Bank Ltd for the year ended 31-12-18 from the following
particulars.

Particulars Rs

Interest on loans 13 6,98,000

Interest on fixed deposits15 7,30,000

Commission charged to customers 14 18,200

Establishment charges 16 3,10,000

Discount on bills discounted 13 3,88,000

Interest on cash credit 13 4,48,000

Amount charged on current A/c 14 24,000

Rent & taxes 16 36,000

Interest on Overdrafts 13 2,56,000

Director’s fees 16 4,000

Auditor’s fees16 4,400

Interest on savings A/c 15 1,38,000

Postage & telegram 16 3,000

Printing & stationery16 7,800

Sundry charges16 3,600

Provide Rs 1,60,000 for taxation

Rebate on bills discounted(less from sc 13) 96,000

3. From the following information,prepare profit & loss Account of Apana Bank Ltd for the year
ended 31-3-19 along with necessary schedules.

Amt in thousands
Interest on Cash Credit13 1,820

Interest on Overdraft13 750

Interest on term loan13 2,540

Income on Investments13 840

Interest on Balance with RBI13 150

Commission on remittances & 75

transfer14

Commission on letters of credit 118

Commission on Government business 82

Profit on sale of land & building14 27

Loss on exchange transactions14 62

Interest paid on deposits15 1,726

Auditors fees & allowances 120

Director’s fees & Allowances 250

Advertisements 180

Salaries 1,240

Payment to provident fund 280

Printing & stationery 140

Repairs & Maintenance 50

Postage,Telegram & telephone 60

Other Information

1.The above mentioned figure of interest on advances includes Rs 2,020 thousands of interests
on NPA out of which only 750 thousands have only be received.(LESS FROM SC13 2020
&+750)

2.The classification of Advances:

% provision Amt in thousands

Standard 0.40% 3,000
Substandard 10% 1,120
Doubtful Assets not covered by security 100% 200
Doubtful Assets not covered by security for 1 year 20% 50
Loss Assets 100% 200
3.Make Provision for tax @ 30%

4. From the following information Of Hiral Bank Ltd. Prepare Profit & Loss A/c for the year
ended 31/3/2018 and 31/3/2019 along with necessary schedules.

Particular Year ended Year ended

31/3/2019 31/3/2018
`000 `000
Interest / Discount on advance/bills 13 60,000 50,000
Income on investment 13 12,000 10,500
Interest on balance with RBI 13 4,500 4,000
Commission, Exchange & Brokerage 14 3,000 2,500
Profit on sale of investment 14 120 125
Interest on deposit 15 31,500 28,000
Interest on RBI borrowing 15 3,350 3,000
Payment to provision for employees 16 10,000 8,500
Rent, taxes and lighting 1,000 800
Printing & Stationery 250 200
Advertisement 100 50
 Depreciation on bank property 250 200
Director’s fees, allowances & 100 50
expenses
Auditor’s fees and expenses 50 30
Law charges 20 15
Postage, Telegrams and Telephone 400 250
Repairs and Maintenance 100 75
Insurance 900 800
Other Expenditure 850 900
Balance in P&L A/c b/f ? 1,000

The following adjustments are to be made:

1. Make provision for income tax @ 30% for the current year. The rate of income
tax for the year ended 31/3/2018 was also 30%.
2. Every year, the bank transfer 25% of Profit to statutory reserve.
Rebates on bill discounted on 31/3/2017, 31/3/18and 31/3/19 were ` 500 Thousand, 650
thousand and 750 thousand respectively.

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5 The following balance have been extracted from the books of B Bank Ltd. as on 31
March, 2015.
Prepare the relevant Profit & Loss Account
Particulars `
Interest on Fixed Deposits 15 2,00,000
Profit on Sale of Investment 14 80,000
Interest on saving Deposits 15 4,00,000
Loss on sale of Fixed Asset 14 20,000
Commission & Brokerage (cr) 14 50,000
Dividend Received 14 10,000
Interest & Discount 13 15,00,000
Interest on Investments 13 40,000
Salaries, Allowances 1,02,000
Salary to General Manager 48,000
Director’s fees 10,000
Rent & Rates 40,000
General Expenses 6,000
Stationery & printing 10,000
 Audit fees 4,000

Rebate on bills discounted for unexpired term amounted to ` 10,000. Create provision for
taxation ` 2,00,000 & for doubtful debts ` 60,000. `15,000 to be transferred to the General
Reserve.

Balance Sheet

1. The following is the trial Balance and the additional information, prepare the Balance
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Sheet of Maharashtra Bank Ltd. as on 31 March 2018, giving the relevant Schedules.

Particulars Debit Particulars Credit

[` In’ [`In’000]
000]
Cash Credits9 1,23,815 Share Capital 29,700
Cash in hand6 23,065 [29,70,000 Equity Shares of
Cash with Reserve Bank of India6 7,740 `10 each fully paid up]1
38,650
Cash with other banks7 13,281 Statutory Reserves2
Money at call and short notice7 31,518 Opening Balance
61,800
Gold8 6,284 Profit & Loss A/c2
Government Securities8 36,525 Opening balance
18,500
Current Accounts9 6,200 Net Profit for the
Premises10 12,355 year [Before
Furniture10 8,518 appropriations]
57,050
Term Loans9 1,18,932 Fixed Deposits3
25,500
Recurring Deposits3
62,500
Saving Deposits3
78,018
Current Accounts3
150
Bills Payable5
16,365
Borrowings from other banks4
Total 3,88,233 Total 3,88,233

Additional Information:
a. Bill for collection Rs 15,30,000.
b. Acceptance and Endorsements Rs10,12,000.
c. Claims against the bank not acknowledged as debts Rs45,000
d. Depreciation charged during the year – Premises Rs 4,45,000, Furniture 5,72,000.

2. The following is trial balance of DJ Bank Ltd. Prepare Balance sheet as on 31-3-2016.
 Amt in ‘000’
Particulars Debit Particulars Credit
Cash in hand 6 120 Share Cap. 1 500

Cash with RBI6 200 Reserve fund 2 1300

Cash with other banks 7 300 Dividend equalization reserve 2 200
Money at call 7 50 Profit & Loss on 31/3/2016 2 500
Investment in Govt securities 8 150 Current accounts 3 80
Shares & Debentures 8 50 Savings Bank Deposits 3 300
Gold 8 300 Fixed deposits 3 800
Silver 11 50 Recurring Deposit 3 200
Loan 9 1890 Borrowings 4 600
Bills discounted 9 300 Branch adjustment 5 20
Fixed Assets (at cost) 10 2000 Unclaimed dividend 10
Fixed assets acquired in Satisfaction of 60 Unpaid dividend 30
claim 11
Advance tax 11 20 Proposed Dividend 50
Tax deducted at source 11 10 Provision for tax 30
Accrued interest 11 70 Unexpired Discount 50
Bills Payable 40
Accrued Interest 5 40
Provision for Depreciation 800
Reserve for doubtful debts 20
Total 5,570 Total 5,570

Other Information:

1. Bills for collection ` 2,00,000

2. A claim by employees for bonus amounting to ` 15,000 is pending
 award of arbitration
3. Liability for partly paid investment ` 20,000
4. Guarantees given on behalf of constituents ` 25,000
3. From the following information, Prepare a Balance Sheet of Chak De India Bank Ltd. As on
31-03-19 along with relevant schedules taking into account additional Information:
`in Crores’
Particulars Debit Credit
Share Capital (Share of `10 each) 1 100
Statutory Reserve (Opening Balance) 2 70
Capital Reserve 2 50
Security Premium 2 40
Profit/Loss A/C (Opening Balance) 2 60
Net Profit before Appropriations 2 80
Demand Deposit 3 128
Saving Deposit3 212
Term Deposit3 160
Borrowing with other Banks 4 32
Bills Payable5 18
Inter office Adjustments5 8
Interest Accrual 5 26
Cash on Hand6 62
Cash with RBI6 34
Money at Call & Short Notice7 82
Term Loans9 346
Cash Credit9 114
Premises10 112
Furniture10 18
Gold 8 88
Government Security8 58
Cash with Other Banks7 70
 Total 984 984

Additional Information:

1. 60% of the term loans are secured by tangible assets. 40% of the term
loans are secured by Government Guarantee & 10% of Cash credit is
unsecured.(present sc 9)
2. Bills for collection ` 28 Crores.

3. Acceptance & Endorsement `32 Crores. cl-12

4. Depreciation on Premises `20 Crores & Furniture `2 Crores Provided during the Year.

5. Transfer 25 % of Current year Profit to Statutory Reserve.

6. Also Calculate Cash Reserve Required & Statutory Liquidity Reserve required.
Note: Cash Reserve required is 3% of Demand & Time Liability & Statutory Liquidity
Reserve required is 30% of Demand & Time Liability.
(Demand liabilities:are those liabilities which are to be paid as and when demanded.
Example: deposit in saving and current accounts are demand liabilities. Bank have to
pay then as and when demanded. Time liabilities: are those liabilities which are to be
paid on completion of prescribed period)

4.Following is the Trial Balance of Apna Sapna Money Money Bank limited. You are required to
prepare final accounts as the prescribed format of Banking Regulation Act.

TRIAL BALANCE AS ON 31st MARCH 2018

DEBIT BALANCES AMOUN CREDIT BALANCES AMOUN

T T
Furniture10 7000 Share Capital 1
Premises10 16000 [1930 Equity Shares of Rs.10
each
Other Fixed assets10 500 Fully Paid] 19300
Bank Overdraft9 2800 Profit for the year2 15000
Cash Credit9 8100 Last years profit carried 39000
forward2
 Term Loan9 50000 Statutory Reserve2 12000
Investments-Government 11500 Fixed Deposit a/c3 32000
bonds8
Investments-Approved 6600 Deposits in saving a/c3 11000
8Securities
Cash deposited in other banks7 22000 Deposits in current a/c3 13000
Money at call and short notice7 7800 Borrowings from other banks 4 11700
Cash in Hand6 15000 Inter office adjustments 5 9500
Cash deposited with RBI6 17200 Bills Payable5 2000
164500 164500
ADDITIONAL INFORMATION

1. Create 25% statutory reserve on current year profits.

2. Bill for collection amounted to Rs. 30000
3. Claim against bank not acknowledged as debt is Rs. 80000 12
4. Partly paid investments were worth Rs. 50000 12
5. Acceptances & Endorsement of bill were Rs. 20000 12

5.From the following information prepare Profit & Loss account of Unnati Bank Limited
for the year ended 31st March 2018.

[Rs. in Lakhs]

PARTICULARS AMOUNT PARTICULARS AMOUNT

Payment to Employees 500 Depreciation on Property 100
Rent, Taxes and Lighting 250 Directors Fees 15
Law Charges 10 Postage & Telegram 5
Interest payable on Deposit 1250 Interest on Borrowings 45
Commission, Exchange & 235 Profit on Sales of 700
Brokerage Investment
Repairs and Maintenance 35 Other Expenses 45
Interest received 2200 Income on Investment 800
Profit on exchange transaction 125 Profit / Loss carried 370
forward
Interest on Balance with RBI 700 Interest received on 400
interbank deposit
Printing & Stationary 75 Auditor's Fees 20
Advertisement & Publicity 20 Insurance 50
ADDITIONAL INFORMATION
 1. Transfer 25% of current year net profit to statutory reserve
2. Transfer 10% of current year net profit to proposed dividend

Q6: From the following particulars, prepare the final accounts of Barnali Bank Ltd.

Balance Sheet as on 31st March 2019

Particulars Dr. ` Cr. `

Share Capital: 1

1,00,000 Shares of ` 10 each, ` 5 paid up 5,00,000

Reserve Fund2 10,00,000

Fixed Deposits3 20.00,000

Savings Bank Deposits3 30,00,000

Current Accounts3 70,00,000

Borrowed from Bank4 2,00,000

Investments8 30,00,000

Premises10 12,00,000

Cash in hand6 60,000

Cash at bank7 28,00,000

Money at Call and Short Notice7 3.00,000

Interest Accrued and Paid15 2,00,000

Salaries16 80,000

Rent16 30,000

Profit and Loss Account (1.4.18) 1,60,000

Interest earned during the year13 4,50,000

Bills Discounted9 5,00,000

Bills Payable5 8,00,000

Loans, Advances, Overdrafts and 70,00,000

Cash Credits9

Unclaimed Dividend5 30,000

Sundry Creditors5 30,000

1,51,70,000 1,51,70,000