Dr.B.

Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

ADVANCED CORPORATE ACCOUNTING

UNIT – V
Chapter – 5: Banking Accounts

Meaning of Banking

Bank is a financial institution which accepts deposits from the public, for the purpose
of lending and investment. According to the Banking Regulation Act 1949, sec. (5) banking
refers to, “the accepting for the purpose of lending or investment, of deposits of money from
the public, repayable on demand or otherwise and with draw able by cheque, draft, order, or
otherwise, ATM card, Net Banking, Mobile Banking”.

The banking companies also engage in the manufacturers of goods or services or trade
and accepts deposits of money from public for financing its business activities will not treated
as doing business of banking.

Methods of Banking Accounts Prepared

1. Rebate on Bills Discounted

2. Non –Performing Assets (NPA)
3. Interest on doubtful debts
4. Preparation of Profit and Loss a/c
5. Balance Sheet
1. Rebate on Bills Discount

Meaning

It also known as discount received in advance nature or unexpired discount or discount

received but not received. Bills discounted may have maturity date beyond the current
accounting year. The amount of discount relating to the period of a bill falling in the
accounting year is the unexpired discount. Unearned amount discount received for those bills
will mature after the date of closing of final accounts.

1
 Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

JOURNAL ENTRIES
S. No Particulars Dr Cr
1. Amount transfer to opening balance in Rebate a/c
Rebate on Bills Discounted a/c Dr XXX
To Discount Received a/c XXX
(Being transfer of opening balance in the rebate a/c)

2. Amount transfer to closing balance in Rebate a/c (Current year)

Discount received (or) Discount a/c Dr XXX
To Rebate on Bills Discounted a/c XXX
(Being transfer of closing balance rebate a/c)

3. Net discount amount transfer to P & L a/c

Discount received a/c Dr XXX
To Profit and Loss a/c XXX
(Being transfer of discount net after adjustment)

Note: Period Calculation

 Just 3 days Grace days add with the Bill date

2. Non –Performing Assets (NPA)

Meaning

Any assts which generates income is a “Performing Assets”. An asset becomes ‘Non-
assets when it cases to generate income for a bank. This happens when interest or
installment of principal delay exceeds a ‘stipulated time’.

Provisions for NPA

Items %
A Standard Assets 0.25%
B Sub-Standard Assets 10%
Doubtful Assets:
Up to 1 year 20%
C More than 1 year but up on 3 years 30%
Above 3 years 50%
Unsecured 100%
D Loss Assets 100%

3. Interest on Doubtful Debts

Meaning

At the time of finalizing account or preparation of the final account of a bank, some
advance may be doubtful of collection. These doubtful debts not treated as income. The
doubtful debts treated 3 ways namely, (a). Investment suspense method, (b). Cash basis and
(c). Accrual Method

2
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

4. Preparation of Profit and Loss a/c

Meaning

Banks are prepared final accounts for every financial year on 31st march. But for
internal purpose, banks usually close their books on 30th September half yearly closing. The
profit and loss account of a banking company has to be prepared in Form “B” of Schedule III
of banking Regulation Act 1949.
Form – ‘B’ Schedule – III
Profit and Loss a/c for the year 31st March …
Year ended Year ended
Schedule
Particulars on 31.03. … on 31.03. …
Number
(Current year) Rs (Previous year) Rs
I. INCOME
Interest Earned 13 xxx xxx
Other Income 14 xxx xxx
Total (1) xxx xxx
II. EXPENDITURE
Interest expended 15 xxx xxx
Operating Expenses 16 xxx xxx
Provisions & Contingencies - xxx xxx
Total (2) xxx xxx
III. PROFIT AND LOSS A/c
Net Profit / Loss (-) for the year (1 - 2) xxx xxx
Profit / Loss (-) brought forwarded xxx xxx
Total xxx xxx
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) xxx xxx
Transfer to other Reserve xxx xxx
Transfer to Govt./ Proposed Dividend xxx xxx
Balance Carried over to B/S XXX XXX
TOTAL XXX XXX
Important Note:

 Payment of commission, brokerage etc, = 2.5% of paid up value of share

 Cash reserve = At least 3% maintain bank reserve an average Daily balance
 Statutory Liquidity Ratio = Not less than 25% of total demand & time liabilities of India
Schedule No. : 13 - Interest Earned
Particulars Rs.
I. Interest/ Discount on advance or Bills xxx
II. Income on Investments xxx
III. Interest on balances with RBI and other Inter-Bank- Funds xxx
IV. Others xxx
TOTAL XXX

3
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 14 – Other Income

Particulars Rs.
I. Commission, Exchange & Brokerage xxx
II. Profit on sale of investments xxx
Less Loss on investments xxx xxx

III. Profit on revaluation of investments xxx

Less Loss on revaluation of investments xxx xxx

IV. Profit on sale of Fixed Assets xxx

Less Loss on sale of Fixed Assets xxx xxx

V. Profit on Exchange transactions xxx

Less Loss on Exchange transactions xxx xxx
VI. Income earned by ay of dividend etc, from subsidiaries /
companies and or Joint venture abroad or in India xxx
VII. Miscellaneous income xxx
TOTAL XXX
Note:
 Under item II to V, if any loss or minus (-) value is show that value Ignore or (Nil)

Schedule No. : 15 - Interest Expended

Particulars Rs.
I. Interest on Deposits xxx
II. Interest on RBI / Inter - bank – Borrowings xxx
III. Others xxx
TOTAL XXX

Schedule No. : 16 - Other Expenses

Particulars Rs.
1. Payment to and provisions for employees xxx
2. Rent, taxes and lighting xxx
3. Printing and stationery xxx
4. Advertisement and publicity xxx
5. Depreciation on bank’s property xxx
6. Directors fees, allowances and expenses xxx
7. Auditors fees allowances and expenses xxx
8. Law charges xxx
9. Postage, telegrams, telephones, etc. xxx
10. Repairs and maintenance xxx
11. Insurance xxx
12. Other expenses xxx
xxx
TOTAL XXX

4
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Provisions and Contingencies

Particulars Rs.
Provisions
1. Bad & Doubtful debts xxx
2. Taxation xxx
3. Diminution in the value of investment xxx
4. Depreciation xxx
5. Others xxx
Contingencies
Transfer to any amount for contingencies xxx
TOTAL XXX

5. Balance Sheet
Meaning

It refers to banking company has to be prepared in Form ‘A’ of schedule – III with
banking Regulation Act 1949.

Form – ‘A’ Schedule – III

Balance Sheet for the year 31st March …
Year ended Year ended
Schedule on 31.03. … on 31.03. …
Particulars
Number (Current year) (Previous year)
Rs Rs
I. CAPITAL & LIABILITIES
Capital 01 xxx xxx
Reserve & surplus 02 xxx xxx
Deposits 03 xxx xxx
Borrowings 04 xxx xxx
Other liabilities & Provisions 05 xxx xxx
TOTAL XXX XXX
II. ASSETS
Cash and balance with RBI 06 xxx xxx
Balance with bank and money at call &
short term notice 07 xxx xxx
Investments 08 xxx xxx
Advances 09 xxx xxx
Fixed Asses 10 xxx xxx
Other Assets 11 xxx xxx
TOTAL XXX XXX
Contingent Liabilities:
Bills for Collection 12 xxx xxx

5
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 1 - Share Capital

Particulars Rs. Rs.
I. For Nationalised Banks capital xxx
(Fully owned by Central Govt.)
II. For Bank Incorporated outside India capital xxx
III. For Other Banks:
Authorised capital xxx
Issued Capital xxx
Subscribed capital xxx
Called up capital xxx
xxx
Less Calls in arrear or unpaid xxx
xxx
Add Forfeited shares xxx xxx
TOTAL XXX

Schedule No. : 2 – Reserve & Surplus

Particulars Rs. Rs.
I. Statutory Reserve
Opening Balance xxx
Add Addition During the current year xxx
xxx
Less Deduction during the year xxx xxx

II. Capital Reserve

Opening Balance xxx
Add Addition During the current year xxx
xxx
Less Deduction during the year xxx xxx

III. Share Premium

Opening Balance xxx
Add Addition During the current year xxx
xxx
Less Deduction during the year xxx xxx

IV. Revenue and other Reserves

Add Opening Balance xxx
Addition During the current year xxx
Less xxx
Deduction during the year xxx xxx

V. Balance in Profit and Loss a/c xxx

TOTAL XXX

6
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 3 - Deposits

Particulars Rs. Rs.
(A.)
I. Demand Deposits
(i). From Banks xxx
(ii). From Others xxx xxx

II. Saving Bank Deposits xxx

III. Term Deposits
(i). From Banks xxx
(ii). From Others xxx xxx

(B.)
I. Deposits of branches in India xxx
II. Deposits of Branches Outside in India xxx xxx
TOTAL XXX

Schedule No. : 4 - Borrowings

Particulars Rs. Rs.
I. Borrowings in India
(i). RBI xxx
(ii). Other Bank xxx
(iii). Other Institution and agencies xxx xxx

II. Borrowing outside India xxx

(Note: Secured Borrowings included)
TOTAL XXX

Schedule No. : 5 - Borrowings

Particulars Rs.
I. Bills Payable xxx
II. Inter-office Adjustment (Net) Cr xxx
III. Interest Accrued xxx
IV. Other Liabilities (including Provisions) xxx
V. Unclaimed Dividend xxx
(Note: Bills payables includes => Surplus note,
letter of credit, Bank Draft) XXX
TOTAL

Schedule No. : 6 - Cash and balance with RBI

Particulars Rs.
I. Cash in hand (including Foreign currency notes) xxx
II. Balance with RBI
(i). In current a/c xxx
(ii). In other accounts xxx
TOTAL XXX

7
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 7 – Balance with bank Money at call notice

Particulars Rs. Rs.
I. In India
(i). Balance with Bank
(a). In current a/c xxx
(b). In other deposit a/c xxx xxx

(ii). Money at call and shot notice

(a). With Banks xxx
(b). With other Banks xxx xxx

II. Outside India

(i). In current a/c xxx
(ii). In other deposit a/c xxx
(iii). Money at call and shot notice xxx xxx
TOTAL XXX

Schedule No. : 8 - Investment

Particulars Rs. Rs.
I. In India
1. Government securities xxx
2. Other approved securities xxx
3. Shares xxx
4. Debenture and bonds xxx
5. Subsidiaries and or joint ventures xxx
6. Other investments (to be specified) xxx xxx

II. Outside India

1. Government securities xxx
2. Subsidiaries and or joint ventures xxx
3. Other investments xxx xxx
TOTAL XXX

Schedule No. : 9 - Advances

Particulars Rs. Rs.
A.
1. Bills purchased & Discounted xxx
2. Cash credit overdraft and loans Receivables on demand xxx
3. Term loans xxx xxx
B.
1. Secured by Tangible Assets xxx
2. Covered by Bank/ Government Guarantees xxx
3. Unsecured xxx xxx
C. Advances in India
1. Priority sector xxx
2. Public sector xxx
3. Banks xxx
4.Others xxx xxx
D. Advances in Outside India
1. Due from Banks xxx
2. Due from Others
(a). Bills purchased & Discounted xxx
(b). Syndicated loans xxx
(c). Others xxx xxx
TOTAL XXX

8
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 10 - Fixed Assets

Particulars Rs. Rs.
I. Premises
At Cost xxx
Add Addition during the year xxx
xxx
Less Deduction during the year xxx xxx

II. Other Fixed Assets

At Cost xxx
Add Addition during the year xxx
xxx
Less Deduction during the year xxx xxx
TOTAL XXX

Schedule No. : 11 - Other Assets

Particulars Rs.
1. Inter - office adjustment (Net) Dr xxx
2. Interest accrued xxx
3. Tax paid in advance/ tax deducted at sources xxx
4. Stationery and stamps xxx
5. Non-banking assets acquired in satisfied of claims xxx
6. Others ( including debit balance of P & L a/c) xxx
TOTAL XXX

Schedule No. : 12 – Contingent Liabilities

Particulars Rs. Rs.
1.Claims against the bank not acknowledged as debts xxx
2.Liabilities for partly paid investment xxx
3.Liabilities on account of outstanding forward
exchange contracts xxx
4.Guarantees given on behalf of constitutes
(a). India xxx
(b). Outside India xxx xxx
5.Acceptance endorsement and other obligations xxx
6.Other items for which the bank is contingently liable xxx
TOTAL XXX

9
 Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
1. Rebate on Bills Discounted

Computation of Rebate on Bills Discounted

Date of Bill Date of No. of Days Discount Amount of Discount for
Maturity away from Rate Bill (Rs.) Days After
31.3.2000 31.3.2000
15.1.2000 18.6.2000 79 8% 25,000 431.69
10.2.2000 13.6.2000 74 7% 15,000 212.29
25.2.2000 28.6.2000 89 7% 20,000 340.44
20.3.2000 23.6.2000 84 9% 30,000 619.67
Closing Rebate on Bills 1,604.09
Note:
 25,000 x 8/100 x 79/366 = 431.69
 15,000 x 7/100 x 74/366 = 212.29
 20,000 x 7/100 x 89/366 = 340.44
 30,000 x 9/100 x 84/366 = 619.67
Journal Entries
S. No Particulars Dr Cr
1. Amount transfer to closing balance in Rebate a/c (Current year)
Discount received (or) Discount a/c Dr 1,604.09
To Rebate on Bills Discounted a/c 1,604.09
(Being transfer of closing balance rebate a/c)

10
 Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Computation of Rebate on Bills Discounted

Date of Bill Date of No. of Days Discount Amount of Discount for
Maturity away from Rate Bill (Rs.) Days After
31.12.1987 31.12.1987
- 06.3.1988 66 5% 1,45,000 1,307
- 15.3.1988 75 6% 4,31,000 5,299
- 21.3.1988 81 4% 2,90,000 2,567
- 14.4.1988 105 3.5% 3,98,000 3,996
- 24.4.1988 115 4.5% 2,36,000 3,336
Closing Rebate on Bills 16,505
Calculation of Amount to be Transferred to P & L a/c
Balance in Discount received a/c ------------- Rs. 15,00,000
Add: Opening balance (1.1.1987) ------------- Rs. 5,340
Rs. 15,05,340
Less: Closing Rebate on Bill on (31.12.1987) ------ Rs. 16,505
Rs. 14,88,835
Journal Entries
S. No Particulars Dr Cr
1. Amount transfer to opening balance in Rebate a/c
Rebate on Bills Discounted a/c Dr 5,340
To Discount Received a/c 5,340
(Being transfer of opening balance in the rebate a/c)

2. Amount transfer to closing balance in Rebate a/c (Current year)

Discount received (or) Discount a/c Dr 16,505
To Rebate on Bills Discounted a/c 16,505
(Being transfer of closing balance rebate a/c)

3. Net discount amount transfer to P & L a/c

Discount received a/c Dr 14,88,835
To Profit and Loss a/c 14,88,835
(Being transfer of discount net after adjustment)

11
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

2. Non – Performing Assets (NPA)

Calculation of Provisions for NPA

% of Provision
Particulars Rs.
Provision Amount
Standard Assets 16,000 0.25% 40
Sub-Standard Assets 1,300 10% 30
Doubtful Assets:
Up to 1 year 700 20% `140
More than 1 year but up on 3 years 400 30% 120
Above 3 years 200 50% 100

Loss Assets 500 100% 500

Total Provision Required 1,030

12
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

A. Calculation of Provisions for NPA (Assets are Secured)

Rs. % of Provision Amount
Particulars
(in (Lakhs) Provision (Rs. in Lakhs)
Standard Assets 48,000 0.25% 120
Sub-Standard Assets 2,400 10% 240
Doubtful Assets:
Up to 1 year 1,600 20% 320
More than 1 year but up on 3 years 1,200 30% 360
Above 3 years 800 50% 400

Loss Assets 1,800 100% 1,800

Total Provision Required 3,240

B. Calculation of Provisions for NPA (Assets are unsecured)

Rs. % of Provision Amount
Particulars
(in (Lakhs) Provision (Rs. in Lakhs)
Standard Assets 48,000 0.25% 120
Sub-Standard Assets 2,400 10% 240
Doubtful Assets: (Unsecured)
(1,600 + 1,200 + 800 = 3,600) 3,600 100 3,600

Loss Assets 1,800 100% 1,800

Total Provision Required 5,760

13
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

3. Preparation Profit & Loss Account

Schedule No. : 13 - Interest Earned

Particulars Rs.
Interest on Loan 2,490
Discount on Bills Discounted 1,490
Interest on O/D 1,600
Interest on Cash Credit 2,320
Total 7,900
Schedule No. : 14 – Other Income
Particulars Rs.
Commission 100
Total 100
Schedule No. : 15 - Interest Expended
Particulars Rs.
Interest on Deposits 3,200
Total 3,200
Schedule No. : 16 - Other Expenses
Particulars Rs.
Sundry Charges 100
Rent & Taxes 200
Establishment 500
Auditors fees 35
Director fees 16
Total 851
Provisions and Contingencies
Particulars Rs.
Provisions Nil
Contingencies Nil
Total Nil

14
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
Form – ‘B’ Schedule – III
Profit and Loss a/c of Chennai Bank Ltd as on 31.3.1992
Schedule
Particulars Rs. (In 000)
Number
I. INCOME
Interest Earned 13 7,900
Other Income 14 100
Total (1) 8,000
II. EXPENDITURE
Interest expended 15 3,200
Operating Expenses 16 851
Provisions & Contingencies - Nil
Total (2) 4,351
III. PROFIT AND LOSS A/c
Net Profit (1 - 2) 3,649
Total 3,649
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) 912.25
(3,649 x 25%)
Balance Carried over to B/S 2,736.75
TOTAL 3,649

15
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 13 - Interest Earned

Particulars Rs.
Interest on Loan 250
Interest on Cash Credit 160
Interest on O/D 50
Discount 40
Total 500
Schedule No. : 14 – Other Income
Particulars Rs.
Amount charge against current accounts 20
Commission, Brokerage and Exchange 15
Total 35
Schedule No. : 15 - Interest Expended
Particulars Rs.
Interest on saving a/c 150
Interest on Fixed deposits 190
Total 340
Schedule No. : 16 - Other Expenses
Particulars Rs.
Salaries & Allowances 120
Rent, tax and insurances 5
Dearness Allowance 35
Manger salary 15
Contribution to PF 10
Total 185
Provisions and Contingencies
Particulars Rs.
Provisions Nil
Contingencies Nil
Total Nil

16
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
Form – ‘B’ Schedule – III
Profit and Loss a/c of Kasinathan Bank Ltd as on 31.12.1992
Schedule
Particulars Rs. (In 000)
Number
I. INCOME
Interest Earned 13 500
Other Income 14 35
Total (1) 535
II. EXPENDITURE
Interest expended 15 340
Operating Expenses 16 185
Provisions & Contingencies - Nil
Total (2) 525
III. PROFIT AND LOSS A/c
Net Profit (1 - 2) 10
Total 10
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) 2.5
(10 x 25%)
Balance Carried over to B/S 7.5
TOTAL 10

Schedule No. : 13 - Interest Earned

Particulars Rs.
Interest on Loan 518
Discount on Bills Discounted 292
Interest on Cash Credit 446
Interest on O/D 308
Total 1,564

17
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
Schedule No. : 14 – Other Income
Particulars Rs.
Commission received 16
Locker rent 2
Transfer fee 1
Total 19

Schedule No. : 15 - Interest Expended

Particulars Rs.
Interest on Fixed deposits 550
Interest on Current a/c 84
Interest on saving a/c 136
Total 770

Schedule No. : 16 - Other Expenses

Particulars Rs.
Salaries & Allowances 108
Rent, taxes 36
Directors fees 6
Auditor fees 2
Postage an telegram 3
Printing and stationery 6
Dep. on Bank Assets 10
Sundry charges 4
Total 175

Provisions and Contingencies

Particulars Rs.
Provisions Nil
Contingencies Nil
Total Nil

Form – ‘B’ Schedule – III

Profit and Loss a/c of Cholan Bank Ltd as on 31.3.1992
Schedule
Particulars Rs. (In 000)
Number
I. INCOME
Interest Earned 13 1,564
Other Income 14 19
Total (1) 1,583
II. EXPENDITURE
Interest expended 15 770
Operating Expenses 16 175
Provisions & Contingencies (300 + 80) - 380
Total (2) 1,325
III. PROFIT AND LOSS A/c
Net Profit (1 - 2) 258
Total 258
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) 64.5
(258 x 25%)
Balance Carried over to B/S 103.5
TOTAL 258

18
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 13 - Interest Earned

Particulars Rs.
Interest, discount earned 31,628
Income on investment 11,810
Interest on received on balance with RBI 4,243
Total 47,681

Schedule No. : 14 – Other Income

Particulars Rs.
Commission, Exchange and brokerage 2,907
Profit on sale of investment 114
Total 3,021
Schedule No. : 15 - Interest Expended
Particulars Rs.
Interest on RBI Loan 31,404
Interest on Employees 3,362
Total 34,766
Schedule No. : 16 - Other Expenses
Particulars Rs.
Salaries to employees 9,717
Rent, taxes & lightings 1,168
Dep. on Bank Property 379
Directors fees 7
Auditor fees 41
Law Charges 22
Postage an telegram & telephone 403
Other expenses 1,799
Total 13,536

19
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
Provisions and Contingencies
Particulars Rs.
Tax Provisions – 51.75%
Income (47,681 + 3,021) = 50,702
Expenses (34,766 + 13,536) = 48,302
Profit before P & C 2,400
 Tax =(2,400 x 51.75%) 1,242
Total 1,242

Form – ‘B’ Schedule – III

Profit and Loss a/c of Adarsh Bank Ltd as on 31.3.1994
Schedule
Particulars Rs. (In 000)
Number
I. INCOME
Interest Earned 13 47,681
Other Income 14 3,021
Total (1) 50,702
II. EXPENDITURE
Interest expended 15 34,766
Operating Expenses 16 13.536
Provisions & Contingencies - 1,242
Total (2) 49,544
III. PROFIT AND LOSS A/c
Net Profit (1 - 2) 1,158
Add: Last year Profit 1,000
Total 2,158
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) 289.5
(1,158 x 25%)
Transfer to cash reserve - 5% 57.9
(1,158 x 5%)
Proposed Dividend 200 547.4

Balance Carried over to B/S 1,610.6

TOTAL 2,158

20
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 13 - Interest Earned

Particulars Rs.
Interest on loan 250
Interest on cash credit 160
Interest on O/D 150
Discount on bills discounted (Net) 40
Total 600
Schedule No. : 14 – Other Income
Particulars Rs.
Amount charged against current accounts 20
Commission, exchange and brokerage 15
Total 35
Schedule No. : 15 - Interest Expended
Particulars Rs.
Interest on saving a/c 150
Interest on Fixed deposits 190
Total 340

Schedule No. : 16 - Other Expenses

Particulars Rs.
Establishment exp. 120
Rent 5
Dearness allowance 35
Managing director’s salary 15
Contribution to provident fund 10
Total 185

21
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Provisions and Contingencies

Particulars Rs.
Bad depts. 20

Tax Provisions – 55%

Income (600 + 35) = 635
Expenses (340 + 185 + 20) = 545
Profit before P & C 90
 Tax =(110 x 55%) 49.5

Total 69.5

Form – ‘B’ Schedule – III

Profit and Loss a/c of Thanjavur Bank Ltd as on 31.12.1992
Schedule
Particulars Rs. (In 000)
Number
I. INCOME
Interest Earned 13 600
Other Income 14 35
Total (1) 635
II. EXPENDITURE
Interest expended 15 340
Operating Expenses 16 185
Provisions & Contingencies - 69.5
Total (2) 594.5
III. PROFIT AND LOSS A/c
Net Profit (1 - 2) 40.5
Total 40.5
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) 10.125
(40.5 x 25%)
Balance Carried over to B/S 30.375
TOTAL 40.5

22
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 13 - Interest Earned

Particulars Rs. Rs.
Interest on Loan 3,490
Interest on cash credit 2,240
Interest on current accounts 1,280
Discount on bills discounted 1,940
Add Rebate on bills discounted (1.4.95) 480
2,420
Less Rebate on bills discounted (31.3.96) 520 1,900
Total 8,910

Schedule No. : 14 – Other Income

Particulars Rs.
Commission 94
Total 94

Schedule No. : 15 - Interest Expended

Particulars Rs.
Interest on Fixed deposits 3,650
Interest on current a/c 120
Interest on saving deposit accounts 690
Total 4,460

Schedule No. : 16 - Other Expenses

Particulars Rs.
Office Exp. 1,550
Rent and taxes 180
Director’s fees 42
Postal exp. 15
Printing and stationery 39
Other exp. 18
Total 1,844

23
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
Provisions and Contingencies
Particulars Rs.
Tax Provisions – 50%
Income (8,910 + 94) = 9,004
Expenses (4,460 + 1,844) = 6,304
Profit before P & C 2,700
 Tax = (2,700 x 50%) 1,350

Total 1,350

Form – ‘B’ Schedule – III

Profit and Loss a/c of Thanjavur Bank Ltd as on 31.12.1992
Schedule
Particulars Rs. (In 000)
Number
I. INCOME
Interest Earned 13 8,910
Other Income 14 94
Total (1) 9,004
II. EXPENDITURE
Interest expended 15 4,460
Operating Expenses 16 1,844
Provisions & Contingencies - 1,350
Total (2) 7,654
III. PROFIT AND LOSS A/c
Net Profit (1 - 2) 1,350
Total 1,350
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) 3,37.5
(1,350 x 25%)
Balance Carried over to B/S 1,012.5
TOTAL 1,350

24
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
4. Preparation Profit & Loss Account

Schedule No. : 1 - Share Capital

Particulars Rs.
Authorised Share Capital 4,000
Subscribed Share Capital 2,000
Total 2,000

Schedule No. : 2 – Reserve & Surplus

Particulars Rs.
P & l a/c 850
Statutory Reserve 3,000
Investment fluctuation fund 100
Total 3,950

Schedule No. : 3 - Deposits

Particulars Rs.
Current & Deposit a/c 56,000
Total 56,000

Schedule No. : 4 - Borrowings

Particulars Rs.
Short –term loans 40
Total 40

25
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 5 - Borrowings

Particulars Rs.
Telegraphic transfer payable 800
Bank draft payable 1,200
Rebate on bills discount 10
Total 2,010

Schedule No. : 6 - Cash and balance with RBI

Particulars Rs.
Cash in hand 2,000
Cash with RBI 4,000
Total 6,000

Schedule No. : 7 – Balance with bank Money at call notice

Particulars Rs.
Money at call and shot notice 9,000
Cash with State Bank of India 4,000
Total 13,000

Schedule No. : 8 - Investment

Particulars Rs.
Investments 7,000
Total 7,000

Schedule No. : 9 - Advances

Particulars Rs.
Bills Discounted 15,000
Loans & Advances 10,000
Cash credit 10,000
Over draft 1,000
Bills purchased 1,000
Total 37,000

Schedule No. : 10 - Fixed Assets

Particulars Rs.
Buildings 1,000
Total 1,000

Schedule No. : 11 - Other Assets

Particulars Rs.
Nil Nil
Total Nil

26
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 12 – Contingent Liabilities

Particulars Rs.
Endorsement on Bills for Collection 100
Liabilities of customers for acceptances 5,000
Letter of credit 500
Total 5,600

Form – ‘A’ Schedule – III

Balance Sheet of XY Ltd as on 31.3.1996
Schedule
Particulars Rs. In (000)
Number
I. CAPITAL & LIABILITIES
Capital 01 2,000
Reserve & surplus 02 3,950
Deposits 03 56,000
Borrowings 04 40
Other liabilities & Provisions 05 2,010
TOTAL 64,000
II. ASSETS
Cash and balance with RBI 06 6,000
Balance with bank and money at call &
short term notice 07 13,000
Investments 08 7,000
Advances 09 37,000
Fixed Asses 10 1,000
Other Assets 11 Nil
TOTAL 64,000
Contingent Liabilities:
Bills for Collection 12 5,600

27
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 1 - Share Capital

Particulars Rs.
Paid up Share Capital 2,000
Total 2,000

Schedule No. : 2 – Reserve & Surplus

Particulars Rs. Rs.
Reserve Fund 770
P & L a/c 220
Less Rebate on bills discounted 10
210
Less Doubtful debts 80 130

Contingency reserve 170

Total 1,070

Schedule No. : 3 - Deposits

Particulars Rs.
Current & Deposits 3,800
Recurring Deposits 1,000
Fixed deposits 2,000
Cash certificates 1,000
Total 7,800

28
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
Schedule No. : 4 - Borrowings
Particulars Rs.
Loans 1,200
Total 1,200

Schedule No. : 5 - Borrowings

Particulars Rs.
Doubtful depts. 80
Unclaimed dividend 10
Rebate on bills discounted 10
Total 100
Schedule No. : 6 - Cash and balance with RBI
Particulars Rs.
Cash in hand 500
Cash with RBI 1,300
Total 1,800

Schedule No. : 7 – Balance with bank Money at call notice

Particulars Rs.
Nil Nil
Total Nil

Schedule No. : 8 - Investment

Particulars Rs.
Investments 950
Total 950

Schedule No. : 9 - Advances

Particulars Rs.
Bills discounted 1,800
Cash credit 2,000
Bank O/D 800
Loan 4,600
Total 9,200

Schedule No. : 10 - Fixed Assets

Particulars Rs.
Furniture 40
Total 40

Schedule No. : 11 - Other Assets

Particulars Rs.
Stamps & Stationary 10
Branch Adjustment 170
Total 180

29
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 12 – Contingent Liabilities

Particulars Rs.
Acceptance on behalf of Customers 650
Total 650

Form – ‘A’ Schedule – III

Balance Sheet of Saraswathi Ltd as on 31.12.1995
Schedule Rs. In
Particulars
Number (000)
I. CAPITAL & LIABILITIES
Capital 01 2,000
Reserve & surplus 02 1,070
Deposits 03 7,800
Borrowings 04 1,200
Other liabilities & Provisions 05 100
TOTAL 12,170
II. ASSETS
Cash and balance with RBI 06 1,800
Balance with bank and money at call &
short term notice 07 Nil
Investments 08 950
Advances 09 9,200
Fixed Asses 10 40
Other Assets 11 180
TOTAL 12,170
Contingent Liabilities:
Bills for Collection 12 650

30
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 1 - Share Capital

Particulars Rs.
Share Capital 3,500
Total 3,500

Schedule No. : 2 – Reserve & Surplus

Particulars Rs. Rs.
Reserve Fund 2,450

Net Profit for 1992 -1993 1,680

Add Profit and loss a/c (on 1.4.92) 1,470
3,150
Less 25% statuary Reserve (1,680 x 25% = Rs. 420) 420
2,730
Less Dividend for 1992 350 2,380

Statuary Reserve 420

Total 5,250

31
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 3 - Deposits

Particulars Rs.
Fixed deposit Accounts 6,650
Saving bank deposits 21,000
Current Accounts 56,000
Total 83,650

Schedule No. : 4 - Borrowings

Particulars Rs.
Borrowing from other banks 4,400
Total 4,400

Schedule No. : 5 - Borrowings

Particulars Rs. Rs.
Sundry creditors 210
Bills payable 5,600
Unclaimed dividends 210
Add Provisions:
Provision for bad debts 210
Tax provision 700
Rebate on bills discounted (closing) 35 945
Total 6,965
Schedule No. : 6 - Cash and balance with RBI
Particulars Rs.
Cash in hand 420
Cash with RBI 10,500
Total 10,920

Schedule No. : 7 – Balance with bank Money at call notice

Particulars Rs.
Money and call and short notice 2,100
Cash with other banks 9,100
Total 11,200

Schedule No. : 8 - Investment

Particulars Rs.
Investments (at cost) 21,000
Total 21,000

Schedule No. : 9 - Advances

Particulars Rs.
Bills discounted and purchase 4,200
Loans, overdraft and cash credits 49,000
Total 53,200

32
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 10 - Fixed Assets

Particulars Rs.
Land and Building (after dep. on 31.3.93) 7,445
Total 7,445

Schedule No. : 11 - Other Assets

Particulars Rs.
Nil Nil
Total Nil

Schedule No. : 12 – Contingent Liabilities

Particulars Rs.
Bills for collection 980
Total 980

Form – ‘A’ Schedule – III

Balance Sheet of New Bank Ltd as on 31.03.1993
Schedule Rs. In
Particulars
Number (000)
I. CAPITAL & LIABILITIES
Capital 01 3,500
Reserve & surplus 02 5,250
Deposits 03 83,650
Borrowings 04 4,400
Other liabilities & Provisions 05 6,965
TOTAL 1,03,765
II. ASSETS
Cash and balance with RBI 06 10,920
Balance with bank and money at call &
short term notice 07 11,200
Investments 08 21,000
Advances 09 53,200
Fixed Asses 10 7,445
Other Assets 11 Nil
TOTAL 1,03,765
Contingent Liabilities:
Bills for Collection 12 980

33
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

5. Preparation Profit & Loss Account and Balance sheet

Schedule No. : 13 - Interest Earned

Particulars Rs.
NIL NIL
TOTAL
NIL
Schedule No. : 14 – Other Income
Particulars Rs.
Interest, Discount and Commission 2,44,500
TOTAL 2,44,500
Schedule No. : 15 - Interest Expended
Particulars Rs.
Interest Accrued Paid 2,55,000
TOTAL 2,55,000

Schedule No. : 16 - Other Expenses

Particulars Rs.
Premises account – Amount written off 22,500
Current expenditure, salaries, rent 71,250
Amount added to staff retirement fund 30,000

34
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.
TOTAL 96,750
Provisions and Contingencies
Particulars Rs.
Provision for rebate on bills discounted 2,450
TOTAL 2,450

Form – ‘B’ Schedule – III

Profit and Loss a/c for the year 30st June 1980
Schedule
Particulars Rs.
Number
I. INCOME
Interest Earned 13 Nil
Other Income 14 2,44,500
Total (A) 2,44,500
II. EXPENDITURE
Interest expended 15 2,55,000
Operating Expenses 16 96,750
Provisions & Contingencies - 2,450
Total (B) 1,24,700
III. PROFIT AND LOSS A/c
Net Profit / Loss (-) for the year (A - B) 1,19,800
Last year Profit 15,300
Total 1,35,100
IV. APPROPRIATIONS A/c
Transfer to Statutory Reserve (25%) 29,950
(1,19,800 x 25%)
Balance Carried Over to B/S 1,05,150
TOTAL 1,35,100

Schedule No. : 1 - Share Capital

Particulars Rs. Rs.
Share Capital 12,50,000
TOTAL 12,50,000

Schedule No. : 2 – Reserve & Surplus

Particulars Rs. Rs.
Current year profit 1,05150
Statutory Reserve 29,950
Reserve Fund 6,00,000
TOTAL 7,35,100

Schedule No. : 3 – Deposits

Particulars Rs. Rs.
Current a/c and Deposits 77,31,450
TOTAL 77,31,450

35
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 4 – Borrowings

Particulars Rs. Rs.
NIL NIL
TOTAL NIL

Schedule No. : 5 – Borrowings

Particulars Rs. Rs.
Provision for rebated on bills discounted 2,450
TOTAL 2,450

Schedule No. : 6 - Cash and balance with RBI

Particulars Rs. Rs.
Cash in hand & with RBI 15,84,750
TOTAL 15,84,750

Schedule No. : 7 – Balance with bank Money at call notice

Particulars Rs. Rs.
Money at call & short notice 27,42,250
TOTAL 27,42,250

Schedule No. : 8 – Investment

Particulars Rs. Rs.
Share & Stock 6,37,500
Government securities 6,00,000
Other securities 8,25,000
TOTAL 20,62,500

Schedule No. : 9 – Advances

Particulars Rs. Rs.
Loans and Advances 46,65,000
Bills discounted 3,79,500
TOTAL 50,44,500

Schedule No. : 10 - Fixed Assets

Particulars Rs. Rs.
Freehold & Leasehold property 44,15,000
Premises and furniture 3,37,500
TOTAL 7,52,500

Schedule No. : 11 - Other Assets

Particulars Rs. Rs.
Other Suspense’s a/c (Trial balance Excess) 500
TOTAL 500

36
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Schedule No. : 12 – Contingent Liabilities

Particulars Rs. Rs.
Acceptance on behalf of customers 12,00,000
TOTAL 12,00,000

Form – ‘A’ Schedule – III

Balance Sheet for the year 30st June 1980
Schedule
Particulars Rs.
Number
I. CAPITAL & LIABILITIES
Capital 01 12,50,000
Reserve & surplus 02 7,35,1100
Deposits 03 77,31,450
Borrowings 04 Nil
Other liabilities & Provisions 05 2,450
TOTAL 97,19,000
II. ASSETS
Cash and balance with RBI 06 115,84,750
Balance with bank and money at call &
short term notice 07 2,74,250
Investments 08 20,62,500
Advances 09 50,44,500
Fixed Asses 10 7,52,500
Other Assets 11 500
TOTAL 97,19,000
Contingent Liabilities:
Bills for Collection 12 12,00,000

37
 Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

6. Interest on Doubtful Debts

A. Interest Suspended Method

Journal Entries
S. No Date Particulars Dr Cr
1. 31.12.1987 Merchant’s Loan a/c Dr 24,000
To Interest suspense a/c 24,000
(Being interest on doubtful debt)
2. 31.12.1988 Cash a/c Dr 3,04,560
(Rs. 3,00,000 + 24,000 = 3,24,000) (3,24,000 x 0.94) 3,04,560
To Merchant’s Loan a/c
(Being 0.94 per rupee recovered on merchant loan)
3. 31.12.1988 Interest suspense a/c Dr 24,000 22,560
To Interest a/c (24,000 x 0.94) 1,440
To Merchant’s loan a/c
(Being the amount collected out of interest on doubtful debts and
the balance transfer to loan a/c)

4. 31.12.1988 Bad debt a/c (Rs. 3,24,000 - (1,440 + 33,04,500) = 18,000) Dr 18,000 18,000
To Merchant’s’ Loan a/c
(Being uncollected portion of loan written off as bad)

Dr Merchant Loan a/c Cr

Date Particulars Rs Date Particulars Rs
01.01.1987 To Balance b/d 3,00,000 31.12.1987 By Balance c/d 3,24,000
31.12.1987 To Interest suspense 24,000
3,24,000 3,24,000
31.12.1988 By Cash 33,04,560
01.01.1988 To Balance b/d 3,24,000 31.12.1988 By Interest suspense 1,440
31.12.1988 By Bad Debts 18,000
3,24,000 3,24,000

Dr Interest Suspense a/c Cr

Date Particulars Rs Date Particulars Rs
31.12.1987 To Balance C/d 24,000 31.12.1987 By Merchants Loan 3,24,000
24,000 24,000
31.12.1988 To Interest a/c 3,24,000 By Balance b/d 24,000
31.12.1988 To Merchants’ loan 1,440
24,000 24,000

38
 Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Journal Entries
S. No Date Particulars Dr Cr
1. 31.12.1991 Merchant’s Loan a/c Dr 10,000
To Interest suspense a/c 10,000
(Being interest on doubtful debt)

2. 31.1.1992 Cash a/c (Rs. 1,68,000 + 10,500) Dr 1,78,500

Opening cash
Opening balance = 2,00,000 – 40,000 = 1,60,000
Interest = 10,000 -2,000 = 8,000
1,68,500
Bad Debts
Loan = 40,000 x 0.25 = 10,000
Interest = 10,000 x 0.25 = 500
10,500 1,78,000
To Merchant’s Loan a/c
(Being 0.25 per rupee recovered on merchant loan)

3. 31.1.1992 Interest suspense a/c Dr 10,000

To Interest a/c { 8,000 + (2,000 x 0.25) = 8,500} 8,500
To Merchant’s loan a/c 1,500
(Being the amount collected out of interest on doubtful debts and
the balance transfer to loan a/c)

4. 31.1.1992 Bad debt a/c Dr 18,000

{ Total due - Cash paid = Bad Debts.}
{ 2,10,000 – (1,78,500 + 1,500) = 30,000}
To Merchant’s’ Loan a/c 18,000
(Being uncollected portion of loan written off as bad)

39
Dr.B.Palani,
Assistant Professor, Department of Commerce,
SRM Arts and Science College, Kattankulathur.

Dr Merchant Loan a/c Cr

Date Particulars Rs Date Particulars Rs
31.12.1991 To Balance b/d 2,00,000 31.12.1991 By Balance c/d 2,10,000
31.12.1991 To Interest suspense 10,000
2,10,000 2,10,000

31.1.1992 To Balance b/d 2,10,000 31.1.1992 By Cash 1,78,500

31.1.1992 By Interest suspense 1,500
31.1.1992 By Bad Debts 3,000
2,10,000 2,10,000

Dr Interest Suspense a/c Cr

Date Particulars Rs Date Particulars Rs
31.1.1992 To Balance C/d 10,000 31.12.1987 By Merchants Loan 10,000
10,000 10,000
31.12.1988 To Interest a/c 8,500 By Balance b/d 10,000
31.12.1988 To Merchants’ loan 1,500
10,000 10,000

40