PRACTIOCAL QUESTIONS

u l a t i n 4uewtiomw
S t s t Mavh, 2014, the bookR of AlC Rank inelude, among others, following balanee

vwant reeived 4,60,000

Nehate on billdiaecounted (1-4-2013) 32,000
l diounted 31,53,800
Daring the 1st April to l6th May, 2014, the total of rebateon bill discounted is 7 70,000. Caleulate
wrued amount under the head of Discount on Bill Diacount for the yenr 2013-14, which is
Pdited to Profit & Loss Account of the Bank
Ans? 42,INN)
lnterest Rarned ? 18,00,000; Interest Paid 8,00,000; Operating Expenses 1,60,000; Balance
hevious year's Profit & Loss A/e 3,60,000
aleulate
Amount of Statutory Reserve
Profit transterred to BS
Ans.i)r 10,000, tii)r 9,80,000.
& Prepare Profit & Loss Account of Sound Bank Ltd. for the yeur ended 31st March,(72014 from the
in Thousand)
ollowing intormmation
Interest earned ? 10,220; Other Income ? 314; Interest Expended ? 6,80,000; Operating Expenses
3.700.
Ans. 34,000.
Long Caleulation Questions
Preparation of Profit and Loss Account
of an Indian Scheduled Bank
. The following are the prticulars relating to income and expenditureAccount
tor the year ended 31st March, 2014. In order to prepare
Profit & Loss ofbanking companies,
present Schedules 13, 14, 15 and 16 Year ending
Year ending
March 31, 2014 March 31, 2013
Income (in crores of (in crore of
Rupees) Rupees)
210.41 189.18
Overdraft
Interest on Advance, Cash Credit and 80.29 70.02
Discount on Bills Discounted 37.50 40.80
other Banks
Interest on balance with R.B.I. and 150.30 121.20
Income on Investments 52.75 43.25
Commission, Brokerage and Exchange 3.67 4.74
1.17 2.04
Profit on sale of investments
21.65 15.25
Loss on sale of investments
transactions
Profit on foreign exchange
318 ADVANCED ACCOUNTING AND PRACTICE

Profit on Sale of Land, Buildings and Assets 7.60

2.72
Expenditure
Interest on deposits accounts 300.05
Interest payable to R.B.I. 7.95 213.20
131.20
10.3
Operating expenses 111.85
Provisions & Contingencies 88.55
Ans. Schedule 13-Interest Earned-2014 7 478.5 Crore, 2013 7 421.2 Crore
122.25
Schedule 14-0ther Income-2014 7 84.5 Crore, 2013 7 63.92 Crore
Schedule 15-Interest Expended-20147 308 Crore, 2013 223.5 Crore
Schedule 16-Operating Expenses-2014 131.2 Crore, 2013 7 111.85 Crore.
2. The following balances are available from the accounts of Bharat Bank Ltd. You are required t
prepare the Profit & Loss Account for the year ending 31st March, 2014 in the prescribed formato
mat
alongwith its enclosures. Also give necessary notes
Interest on Lean 5,18,000
Interest on Fixed Deposits 5,50,000
Commission received 16,400
Salaries and Allowances 1,08,000
Discount on Bills Discounted 3,90,000
Interest on Cash Credits 4,46,000
Interest Received on Current Accounts 84,000
Rent and Taxes 36,000
Interest on Overdrafts 3,08,000
Director's Fees 6,000
Auditor's Fees 2,400
Interest on Savings Bank AccouFts 1,36,000
Postage and Telegram 2,800
Printing and Stationery 5,800
Lockers Rent 2,000
Transfer Fees 1,400
Depreciation on Bank's Property 10,000
Sundry Income and Charges 3,400
The other information is as follows:
(a) Rebate on Bills Discounted 98,000
b) Bad Debts 80,000
(c) Provision for Income-tax 3,00,000
Ans. Net Profit 7 4,34,200; Transfer to Statutory Reserve 1,08,550; Balance of P&L A/c7 3,25,650.
Hints: Schedule No. 13-7 16,48,000; Schedule No. 14z 23,200; Schedule No. 157 6,86,000;
Schedule No. 16-7 1,71,000; Provision and Contingencies 7 3,80,000.
3. From the following information prepare Profit & Loss Account of Commercial Bank Ltd. for the
year ending, 31st March, 2014. Provision for loss on securities 7 50,000, for taxation 7 1,00,000
and for bad debts 7 51,000. Rebate on Bills Discounted is 7 31,100.

Interest Received 1,10,90,155

Interest on Deposits 72,70,605
Commission Received 22,27,344
Brokerage (credit) 3,10,292
Interest on Borrowings 10,05,100
Salaries of Employees 32,89,224
Allowances to Employees 19,88,887
Rent 4,80,605
40,595
Lighting, ete.
Discount 60,10,111
1,55,398
Rent (credit)
 ACCOUNTS OF BANKING COMPANIES 319
I n s u r a n c c e

Legal E x p e n s e s
1,50,405
34.879
Audit Fees
20,000
Miscellaneous Receipts 2,56.280
Depreciation on Bank's Property 30,115
Repairs of Bank's Property 2,222
Loss on Sale on Govt. Securities 1,02.254
Miscellaneous Expenses 5,84,314
Tax 1,05,090
Ans. Net Profit 7 47,13,185 transfer to Statutory Reserve ? 11,78,296 and Balance Carried over to
Balance Sheet 7 35,34,889.
Hint: Schedule No.13-1,70.69,166; Schedule No. 14- 28,47,060; Schedule No. 1582.75.705:
Schedule No. 16-7 67,26,336; Provision 7 2,01,000
4, Some of the items in the Trial Balance of Dena Bank as on 31st March, 2014 are as follows
Loans and Advances 71.50,00o
Current Account (including overdrafts ofT 1,50,000) 66,00,00o
Bills Discounted and Purchased 19,20,000
Interest on Fixed Deposits 1,55,000
Interest on Loans 2.25,000
Discount (Subject to unexpired discounts 7 30,000) 2,01.000
Interest on Cash Credits 1,05,000
Commission Earned 46,500
Loss on Investment 34,000
Salaries and Allowances 82.000
4.500
Printing and Stationery
75.000
Interest on Saving Bank Deposits
5.000
Auditor's Fees
2,500
Directors' Fees
95,000
Interest on Overdraft
Provision for bad debts, 1st April, 2013 42,000
21,000
Bad Debts
66,000
Provision for income-tax 1st April, 2013 54,000
Income-tax paid for 2013-14 the provision for
& Loss Account of the maintaining Bank,
You required to prepare the Profit
are
debts at 7 52,000 for the year ended March, 2014.
for bad
ncome-tax at 7 84,000 and provision
All working should form part of your answer.
14 7 12,500; Schedule 15 = 7 2,30,000; Schedule 16 =

7 5,96,000; Schedule
=
Ans. Schedule 13 =
7 45,375; Balance of Profit &
Transfer to Statutory Reserve
=

794,000; Net Profit 7 1,81,500;

Loss A/c7 1,36,125.
the year 7 31,000.
lnts: Provision for Bad Debts during
(1 the year ? 72,000.
2) Provision for Income-tax during
. The following fieures are extracted from the books of the Punjab National Bank Ltd. as on 31st

March, 2014 46,18,750

Interest and discount received
25,40,000
nterest paid on deposits 12.50,0000
Issued Capital
Brokerage 2,50,000
Ommission, Exchange and 10,00,000
Reserve of Section 17 6,25,000
Rent received
2,50,000
rofit on sale of investments
2,92,500
Salaries and Allowances
37,500
Directors' Fees
320 ACCOUN'TING AND PRACTICE
ADVANCED

Rent and Taxes paid

Postage and 'Tolegrams
Depreciation on Bank's Properties
Stationery, ete. 2,00
Preliminary Expenses ,150
Audit Pees 9,315
The following further information is given:
has become inolvent and it ie
A customer to whom of12,50,000 has been advanced
( a sum
Estate.
expected that onlyother can be recovered from his
50% debts
(6) There were also for which a provision of? 1,87,500 was 1ound necensary by the

auditors.
(c) Rebate Bills discounted as on 31st March, 2013 7 27,500.
on
Rebate on Bills diacounted aa
31st March, 2014 32,500.
d) Provide? 8,12,500 for income-tax.
(e) Write off half the preliminary expense8.
Prepare Profit & Loss Account in accordance with the law.
Ans. Schedule 13 = 7 46,13,750; Schedule 14 = 7 11,26,000; Schedule 15 =? 25,40,000; Schedule 16
6,36,250; Provisions and Contingencies = 7 16,25,000; Net Profit ? 9,37,500; Transfer t
2,34,375; Balance of P &LA/c carried to
Statutory Reserve
7,03,125
Balance Sheet 7
6. From the following information prepare Profit & Loss Account of V Bank Limited for the year
ended on 31st March, 2014
7 in Thousand
300
Interest on loans
275
Interest on fixed deposits
10
Commission
20
Exchange and Brokerage
Salaries and allowances 150
Discount on bills 152 (Gross)
Interest on cash credits 240
Interest on temporary overdrafts in current accounts 30
Interest on savings bank deposits 87
Postage, telegram and stamps 10
Printing and Stationery 20
10
Sundry expenses
Rent 15
Taxes and Licences 10
Audit fees 10
Additional Information
(i) Rebate on bills discounted 730,000
7 30,000
() Salary of Managing Director
ii) Bad debts 740,000

(iv) Provision for Income-tax is to be made @ 55% (Round off to nearest thousand).
(v)Interest of 7 4,000 on doubtful debts was wrongly credited to interest on loans account.
Ans. Net Profit 7 27,000. Balance carried over to Balance Sheet 20,250.
Hints:(1) Profit before tax 7 61 (000)
61x
(2) Provision for tax = 7 33.55 or 34(000)
100
(3) Provision for contingencies = Provision for bad debts + Provision for tax

40+34 =7 74 (000)
(4) Interest earned (Schedule No. 13) = T 688 (000)
(5) Other Income (Schedule No. 14) = 7 30 (000)
(6) Interest expended (Schedule No. 15) = 7 362 (000)
(7) Operating Expenses (Schedule No. 16) =7 255 (000)
 ACCOUNTS OF 321
BANKING COMPANIES
eom the
From the following information relating to Adarsh Bank Ltd., orepare Profit & Loss Account for
7. he vear ended 31st March, 2014 alongwith the necessary schedules:
Amount for the year
ended 31.3.2014
Interest/Discount on advances/bills 3,16,28,000
Income on investments 1,18,10,000
Interest on balances with R.B.I. 42,43,000
Commission, exchange and brokerage 29,07,000
Profit on sale of inves tments 1,14,000
Interest on deposits 3,14,04,000
Interest on Reserve Bank of India borrowings 33,62,000
Payments to and provisions for employees 97,17,000
Rent, taxes and lighting 9,55,000
Printing and Stationery 2,13,000
Advertisement and Publicity 87,000
Depreciation on Bank's property 2,92,000
Directors fees, allowances and expenses 7,000
Auditors fees and expenses 41,000
Law charges 22,000
Postage, Telegrams, Telephones, etc. 3,12,0000
Repairs and Maintenance 91,000
Insurance 9,15,000
Other Expenditure 8,84,000o
Balance of Profit and Loss account b/f 15,24,000
The following adjustments are to be made:
) Make a provision for income-tax including surcharge@51.75%.
and 5% of profit to revenue
i) Every year, the bank transfers 25% of profits to statutory
reserves
reserve.
(ii) Dividend amounting to 7 2,00,000 for the year ended 31st March,
2014 is proposed by the Board
of Directors.
15 7 3,47,66,000; Schedule
Ans. Schedule 13 T 4,76,81,000; Schedule 14 7 30,21,000; Schedule
=
=
Transfer to Statutory Reserve =
16 7 1,35,36,000; Provisions & contingencies 7 12,42,000;
=
Balance Sheet 7 21,34,600.
2,89,500; Balance of P & L A/c carried to
=
31st Mar, 2014
8. The following figures are extracted from the books of Vijaya Bank Ltd. as on
Interest and discount recevied 20,30,000
Interest on deposits 12,02,000
Issued and Subscribed Capital 5,00,000
Reserve u/s 17 3,50,000
90,000
Commission, Exchange and Brokerage 30,000
Rent Received
Profit on Sale df Investment 95,000
Salaries and Allowances 1,05,000
Director's fees and allowances 12,000
Rent and Taxes paid 54,000
Stationery and Printing 12,000
Postage and Telegram 25,000
Other Expenses 12,000
Audit Fees 4,000
Depreciation on Bank Properties 12,500
Other Information:
Gi) A customer to whom a sum of F 2,50,000 has been advanced, has become insolvent and
exDected that 40% of the sum can be recovered irom his estate. Interest due at 15% on his debt
has not been provided in the books.
 AND PRACTICE
ADVANCED ACCOUNTING
322 7 50,000.
debts o n other debts necessary
for bad and doubtful
i ) Provision
313.2014 is 7 7,500.
bills discounted a s on
ii) Rebate on
for Income-tax.
iv) Provide 7 3,50,000
to declare 10% dividend.
(v)The directors desire
Account in accordance with the
law.
Prepare the Profit & Loss 2,15,000; Schedule 15 7 12,02.000- S
Schedule 13 =7 20,22,500; Schedule
Ans. = =7
14
2,36,500; Provisions and contingencies = 7 5,50,000; Net Profit 7 2,49,000: Troe 16
Balance carried to Balance Sheet 7 1,86,750.
sferto
Statutory Reserve 7 62,250;
Hints: (1) In the absence of clear information it would be assumed that there would not
not nne.
unexpired
discount as on 31-3-2013.
which simply
(2) Directors desire to declare the dividend has inplies that the dividend Lhas not
amount been transferred for dividend.
yet been declared and hence no
(3) The following journal entry is passed in respect to interest payable on doubtful do.
advances
Loan A/c. . . Dr.
To Interest suspense A/c
The effect of above transaction will effect the asset sideof balance-sheet and on theothe
ther
hand Interest suspense account will be shown in the lability side. Hence, their will be n
be no
effect on P& L/c.
Preparation of Balance Sheet
epare from the following particulars the Balance Sheet ofJai Hind Bank Ltd., as at 31st March
2014
Authorised Capital z 1,0o,00,000; Subscribed Capital (4,00,000 shares of 20 each, 5 paid on
each share) r 20,00,000; 1Investments 7 70,00,000; Bills Discounted? 1,50,00.000; Bank Premises
10,00,000; Rebate on Bills not due? 50,000; Circular Notes and Letters of Credit 20,00,.000
Advances to Customers 7 2,20,00,000; Reserves 7 30,00,000; Current and Deposit Accounts
5,60,00,000; Investment Depreciation Account 7 1,00,000; Cash in hand and at Reserve Bank7
1,00,00,000; Cash at Call and Short Notice 7 90,00,000; Profit and Loss Account Credit Balance
78,50,000.
Ans. Balance Sheet 6,40,00,000.
10. The Trial Balance of Indian Bank Ltd. for the year ended on 31st March, 2014 is as follows
Paid-up Capital 20,00,000
Local Bills Discounted 18,00,000
Reserve 7,70,000
Cash Credits and Overdrafts 28,00,000
Unclaimed Dividends 10,000
Loan 46,00,000
Current and Savings Bank Deposits 38,00,000
Fixed Deposits 40,00,000
40,000
Furniture
2,20,000
Profit&L0ss Account Credit
10,000
Stamp and Stationery
1,70,000
Circular Notes, L/C & Provision for Contingencies
Cash in hand 5,00,000
Cash at Bank 13,00,000
1,70,000
Branch Adjustments (Debit)
Investments 9,50,000
Loans against repledgement of customers securities 12,00,000
Directors' require the bank's investments to o,00
be shown in the B/S at market price of 0
on 31st March, 2014.
Prepare B/S as at 31st March, 2014. dule9
Ans. Schedule 2 =
10,90,000; Schedule 3 7 78,00,000; Schedule 5 =7 1,80,000; Seneu
792,00,000; Schedule 11 T 1,80,000; Tbtal of Balance Sheet 7 1,22,70,000.
=
 ACCOUNTS OF BANKING COMPANIES 323
der
Loans against repledgements of customers' securities will appear in the liabilities side unae
Hint.

Borrowings from other Bank etc.

a Balance Sheet of Apex Bank Ltd., as on 31st March, 2014 from the following balrore
7 Crore)
1.
75.00
Subscribed and Paid-up Capital 67.50
Bills Discounted
20.00
Reserve Funds
0.50
Reserve for Taxation
60.00
Bank O v e r d r a f t s
140.00
Loans 25
Unclaimed Dividends
1 50
Furniture 83.75
Fixed Deposits 0.17
Interest on Investments 08
Accrued
Stamp and Stationery 35.62
Investment (at cost) 48.75
Cash in Banks 77.50
Cash Credit 8.37
Contingency Reserves 0.13
Branch Adjustments (Cr.) 152.50
Current Accounts 101.25
Savings Accounts 8.12
P.&L. Balance (Cr.) 18.75
Cash in hand Crore on 31st
value which w a s 7 39.37
Directors wishes to show
the Investments at market
Balance Sheet in new form.
March, 2014. Present the Schedule No. 1 75.00 crore; Schedule
No. 2 31.87 crore;
453.62 crore; 6-18.75 crore;
Ans. Balance Sheet 7 Schedule No. 5-7 9.25 crore;
Schedule No.
Schedule No. 3-7 337.50 crore; Schedule 9-7 345 crore
Schedule No. 8 - 39.37 crore;
Schedule No. 7 R 48.75 crore;
1.50 crore; Schedule
No. 11-7 0.25 crore.
Schedule No. 10 value and
crore under
Schedule No. 8 and difference of market
39.37 under Schedule
Hint: Show Investments on 7 Investment Fluctuation Fund
3.75 crore show in
39.37 35.62 = 7
cost, i.e.,
No. 2. Bank as on 31st March,
the Balance Sheet of Bright
informations prepare
12.
From the following
2014 80,00,000
Authorised Capital 16,00,000
Paid-up Capital 8,00,000
Bills Payable 40,00,000
Current Accounts 22,40,000o
Fixed Deposits Accounts 6,40,000
Profit for the year 16,00,0000
Saving Bank Accounts 27,20,000
Land and Building 48,00,000
Investments 1,60,000
Furniture and Fixtures customers
3,20,000
Endorsements for
Acceptances and 6,40,000
Bills discounted and purchased 8,00,000
Money at Call and short notice 12,80,000
Loans and
Endorsements 3,20,000
Acceptances
ustomer's liability for 4,80,000
Cash Credits 16,00,000
Cash in hand and with Banks
 PRACTICE
ADVANCED ACCOUN'TING AND
824
face value 100 ench on which ? 60 is
of paid..
Investments inchude 8,000 shares ofthe to ? 80,000, The statutory ima
as debts amounted
against the Bank not acknowledged
Profit for the year is arrived betore making adiust
at i
equal to paid-up capital. The the year, but 31at.
not matured on
M or
on Bills discounted during
unexpired discount 8,000 h,
2014 3
7 22,32,000; Schedule =? 78,40,000; Schedul
Ans. Sehedule 1 * 16,00,000; Schedule 2
=

7 ? 8,00,000; Schedule 8=7 48,00.000-s

=

8,08,000; Schedule 6= 16,00,000;Schedule

Schedule 12 R 4,00,000; Tbtal ofBalaneo ule
=

9 24,00,000; Schedule 10=28,80,000; Sheet

1.24.80,000.
Balance Sheet
of Profit & Loss Account and
Preparation
From the following balances of Allahabad
Bank as on 31st March, 2014, prepare its Balance Sh....
18.
and Profit and Loss Account:

Share Capital: 10,000 Shares Cash in hand and with Reserve Bank 11,00,000
Investment at cost
of 100 each 10,00,000
Loans, cash credits and
9,00,000
P.&L. A/e: April 1, 2018 1,00,000
overdrafts, etc.
Deposits: Current 40,00,000 45,00,000
Fixed 20,00,000 Management Expenses 6,00,000
Cash with other Banks
Savings 10,00,000 15,00,000
Investment Reserve 50,000 Buildings 4,00,000
Statutory Reserve 1,50,000 Preliminary Expenses 40,000
Commission & Exchange 2,00,000 Stamps in hand 60,000
Interest and Discount 6,00,000
Provide Depreciation on building at 10% p.a. The market value of investments, on 31st Mareh,
2014 is 8,70,000.
Ans. Schedule 1 = 7 10,00,000; Schedule 2 7 4,30,000; Schedule 3 = * 70,00,000; Schedule 6
7 11,00,000; Schedule 7 7 15,00,000; Schedule 8 7 8,70,000; Schedule 9 = 7 45,00,000,
Schedule 10 = 7 3,60,000; Net Profit = 7 1,30,000; Transfer to Statutory Reserve = 7 32,500,
Balance carried to Balance Sheet = 7 1,97,500; Schedule 13 = 7 6,00,000; Schedule 14 =
2,00,000; Schedule 16 =7 6,40,000, Total of Balance Sheet = 7 84,30,000.
14. The following are the balances of Indian Syndicate Bank Ltd. as at 31st March, 2014:
Share Capital:
8,875 shares of T 100 each 8,87,500
Reserve 5,00,000
Current Accounts 25,81,343
Deposit Accounts 6,85,135
Endorsements for Customers 1,61,599
Acceptances for Customers 1,78,617
Reserve for Final Dividend 66,005
Profit& Loss Account Balance on April 1, 2013 1,28,139
Interest Received 1,41,010

Discount 38,461
Commission 1,54,859
Dividends Received less Tax 86,261
Cash in hand
Balance with Reserve Bank of India 3,41,644
Money at Call and Short Notice 6,21,858
Bills Discounted 2,79,416
Advance to Customers 8,33,483
Liability of Customers for Endorsements 13,42,120
Liability of Customers for Acceptances 1,61,599
Bank Premises 1,78,617
Shares in Subsidiary Co. at Cost 2,60,000
2,48,000
 ACCOUNTS OF
BANKING COMPANIES
Shares in Affiliated Co. at Cost 325
Balances with other Banks
Investments at Cost 1,68,000
Interest paid
2,24,220
General Expenses
6,18,358
42,048
Dividends 1,91,363
Interim
Final 32,188
56,005
required to prepare a Profit & Loss Account and
Vott are 755,98,919 55,98,919
Balance
ollowing adjustments :(a) Rebate on bills discounted 7 3,271: Sheet after taking into account tne
Ans. Total Balance sheet 49,37,099; Net Profit 7 1,63,899;
of (b) Reserve 7 20,000 for taxation.
Sheet 1,62,870; Schedule 1 =7 8,87,500; Balance of Profit carried to Balance
Schedule 5 7 79,276; Schedule 6 7 9,63,502;
=
Schedule 2 =7 7,03.845; Schedule 3 7 32,66,478
=

10,34,358, Schedule 9 7 21,75,603; Schedule 10Schedule 7 = 7 5,03,636; Schedule 8

=

=
7 15 Schedule
2.60,000; 42,048; 12 =7 3,40,216
=
Schedule 13 = * 2,62,451; Schedule 14 = 7 1,54,859, Schedule Schedule 16 = x
1,91,363.
Hints:1,61,599 +1,78,617 =T 3,40,216, This amount is contingent liability.
15. Progressive Bank Ltd. has authorised capital ofT 50 lakh comprising of 50,000 sharesof 100
each,all of which
are subscribed. But 70% of the face value of the shares is called-up.
Depreciation
on land and buildings and furniture is to be provided to the extent of 7 16,000 and 7 7,000
respectively. You are required to prepare Profit & Loss Account and Balance Sheet as on 31st
March, 2014 from the following:

Share Capital 35,00,000

Fixed deposit accounts 81,81,100
Current accounts 60,25,664
Savings bank deposits 40,46,008
Bills Payable 2,00,000
Branch adjustment (Cr.) 77,788
Bills discounted 29,57,040o
Borrowing from other banks in India 5,00,000b
Reserve 4,00,000
Investments 20,26,250
1,02,250
Money at call and at short notice in India
4,10,000
Land and Buildings (Cost: 7 6,00,000)
Furniture (Cost:7 1,04,000) 73,520
Cash in hand 8,40,648
Deposits with other banks 23,00,000
8,00,000
Deposit with Reserve Bank of India 1,20,000
Contingency reserve 1,00,640
Profit and Loss Account (Cr.)
Statutory reserve fund
1,40,000
1,42,40,000
Loans, cash credit and overdraft 372
Stamps in hand 84,300
Salaries 20,000
Provident fund contribution
brokerage 2,00,000
Commission, exchange and etc. 1,25,000
current accounts,
nterest paid on deposits, 3,000
Audit Fees
10,000
Directors' fees 13,300
Legal charges