Illustration no: 1.

1
Discount Bank Ltd.

Date of B/E Due date B/E (Rs) Discount Discount(Rs) Days after Rebate
(%) p.a. (Annual) 31/3/2014 (Rs)
11/1/2014 14/4/2014 60000 16.00 9600 14 368
12/2/2014 15/6/2014 80000 18.00 14400 76 2998
8/3/2014 11/8/2014 110000 12.50 13750 133 5010
37750 8376
Bill no. 1
From 11/1/2014 to 14/4/2014 = 21 + 28 + 31 +14 = 94 days
Hence, discount for 94 days = 9600 x 94 = 2472.33 or say Rs. 2472
365
Therefore, rebate for 14 days = 2472 x 14 = 368.17 or say Rs. 368
94
Journal entry:

Date Particulars L.F. Debit (Rs) Credit(Rs)

31/3/2014 Discount A/c 8376
…………………………………………………..dr 8376
To Rebate on Bills Discounted A/c
(Being provision made by way of rebate on bills
discounted for the next financial year)
1/4/2014 Rebate on Bills Discounted 8376
A/c...........................dr 8376
To Discount A/c
(Being provision by way of rebate on bills
discounted last year, now reversed)

Illustration 1.2

Indusind Bank Ltd.

Bill Date of bill Date of Due date Discount Days Amount of Rate of Total Rebate
no Discount period after Bill (Rs) discount annual (Rs)
(days) 31/3/2014 (%) discount
(Rs)
105 21/2/2014 28/2/2014 24/5/2014 86 54 500000 12 60000 8877
109 28/2/2014 20/3/2014 31/5/2014 73 61 400000 12 48000 8022
148 10/3/2014 23/3/2014 13/5/2014 52 43 300000 12 36000 4241
150 15/3/2014 30/3/2014 18/5/2014 50 48 700000 12 84000 11047
1900000 TOTAL 32187

Bill no: 105 Discount for 86 days is [60000 x 86]/365 = Rs. 14136
109 Discount for 73 days is [48000 x 73]/365 = Rs. 9600
148 Discount for 52 days is [36000 x 52]/365 = Rs. 5129
150 Discount for 50 days is [84000 x 50]/365 = Rs. 11506
TOTAL= Rs. 40371
Journal entry:
Date Particulars L.F. Debit (Rs) Credit(Rs)
2014
Feb/March Bills Purchases and Discounted A/s.................Dr 1900000
To Bank A/c (Customer’s a/c) 1859629
To Discount A/c 40371

31/3/2014 Discount A/c 32187

………………………………………………….Dr 32187
To Rebate on Bills Discounted A/c
1/4/2014 Rebate on Bills Discounted 32187
A/c...........................dr 32187
To Discount A/c
(Being provision by way of rebate on bills
discounted last year, now reversed)

ABC BANK LTD.

SCHEDULE 10: DEPRECIATION (Rupees)

ASSETS GROSS BLOCK PROVISION FOR DEPRECIATION NET BLOCK
OPENING ADDITIONS DELECTIONS CLOSING OPENING ADDITIONS DELECTIONS CLOSING OPENING CLOSING

L&B 8000000 NA NA 8000000 00 800000 NA 800000 8000000 7200000

F&F 1500000 NA NA 1500000 00 300000 NA 300000 1500000 1200000
Vehicles 600000 NA NA 600000 190000 40000 NA 230000 410000 370000
Others 100000 NA NA 100000 25500 23000 NA 48500 74500 51500
TOTAL 10200000 10200000 215500 1163000 1378500 9984500 8821500
Illustration 1.37 (pp 72):
From the following details of State Bank of Travancore, you are
required to prepare the P&L account for the year ended 31/3/2017 and
Balance sheet as on 31/3/2017
Particulars Debit (Rs) Credit
(Rs)
Issued and subscribed capital 4000000
(40000 share of Rs. 100 each)
Money at call and short notice 2000000
Reserve fund 2000000
Cash in hand 1800000
Deposits 3700000
Cash at bank 2200000
Borrowings 1050000
Investments 1300000
Secured loans 2200000
Cash credits 1050000
Premises (less depreciation) 850000
Furniture (less depreciation) 150000
Rent 7500
Interest and discounts 1500000
Commission and brokerage 195000
Interest paid on deposits 450000
Salary and allowance paid 200000
Interest paid on borrowings 75000
Audit fees 10000
Directors fees 12000
Other assets 100000
Depreciation on bank property 19500
Printing and stationery 12000
Advertisement 1500
Postages and telegrams 3000
Other expenses 4500
Total 12445000 12445000

Additional information:
 a) Provide Rs. 20000 for doubtful debts
b) Rebate on bills discounted is rs. 25000
c) Acceptances and endorsements on behalf of customers are Rs.
400000
d) Provide Rs. 40000 for taxes
e) Transfer 25% of profit to Statutory Reserve

WORKING NOTES:-

SCHEDULE 01: SHARE CAPITAL

PARTICULARS Rs.
AUTHORISED, ISSUED AND SUBSCRIBED CAPITAL:
(40000 SHARES OF Rs. 100 EACH) 4000000
TOTAL 4000000

SCHEDULE 02: RESERVES AND SURPLUS

PARTICULARS Rs.
RESERVE FUND (OPENING BALANCE) 2000000
ADD: STATUTORY RESERVE FOR CURRENT YEAR 203750
PROFIT & LOSS ACCOUNT 611250
TOTAL 2815000

SCHEDULE 03: DEPOSITS

PARTICULARS Rs.
DEPOSITS 3700000
TOTAL 3700000

SCHEDULE 04: BORROWINGS

PARTICULARS Rs.
BORROWINGS 1050000
TOTAL 1050000

SCHEDULE 05: OTHER LIABILITIES AND PROVISIONS

PARTICULARS Rs.
PROVISION FOR RABATE ON BILLS DISCOUNTED 25000
PROVISION FOR INCOME TAX 40000
TOTAL 65000

SCHEDULE 06: CASH AND BALANCE WITH RBI

PARTICULARS Rs.
 CASH IN HAND 1800000
TOTAL 1800000

SCHEDULE 07: BALANCE WITH BANKS & MONEY AT CALL AND SHORT NOTICE
PARTICULARS Rs.
MONEY AT CALL AND SHORT NOTICE 2000000
CASH AT BANKS 2200000
TOTAL 4200000

SCHEDULE 08: INVESTMENTS

PARTICULARS Rs.
INVESTMENTS 1300000
TOTAL 1300000

SCHEDULE 09: ADVANCES

PARTICULARS Rs.
SECURED LOANS 2200000
CASH CREDIT 1050000
LESS: PROVISION FOR DOUBTFUL ASSETS 20000
TOTAL 3230000

SCHEDULE 10: FIXED ASSETS

PARTICULARS Rs.
PREMISES (LESS DEPRECIATION) 850000
FURNITURE (LESS DEPRECIATION) 150000
TOTAL 1000000

SCHEDULE 11: OTHER ASSETS

PARTICULARS Rs.
NON BANKING ASSETS 100000
TOTAL 100000

SCHEDULE 12: CONTINGENT LIABILITIES

PARTICULARS Rs.
ACCEPTANCE AND ENDORSEMENTS ON BEHALF OF CUSTOMERS 400000
TOTAL 400000
 STATE BANK OF TRANVANCORE
BALANCE SHEET AS ON 31 MARCH, 2017
PARTICULARS SCHEDULE NO. Rs.
CAPITAL AND LIABILITIES:
CAPITAL 1 4000000
RESERVES AND SURPLUS 2 2815000
DEPOSITS 3 3700000
BORROWINGS 4 1050000
OTHER LIABILITIES AND PROVISIONS 5 65000
TOTAL 11630000
ASSETS:
CASH IN HAND AND BALANCE WITH RBI 6 1800000
BALANCE WITH BANKS AND MONEY AT CALL & SHORT 7 4200000
NOTICE
INVESTMENTS 8 1300000
ADVANCES 9 3230000
FIXED ASSETS 10 1000000
OTHER ASSET 11 100000
TOTAL 11630000
CONTINGENT LIABILITIES: BILLS FOR COLLECTION 12 400000

SCHEDULE 13: INTEREST EARNED

PARTICULARS Rs.
INTEREST AND DISCOUNT 1500000
LESS:REBATE 25000
TOTAL 1475000
SCHEDULE 14: OTHER INCOME

PARTICULARS Rs.
COMMISSION AND BROKERAGE 195000
TOTAL 195000

SCHEDULE 15: INTEREST EXPENDED

PARTICULARS Rs.
INTEREST PAID ON DEPOSITS 450000
 INTEREST PAID ON BORROWINGS 75000
TOTAL 525000

SCHEDULE 16: OPERATING EXPENSES

PARTICULARS Rs.
RENT 7500
SALARIES & ALLOWANCES 200000
AUDIT FEES 10000
DIRECTORS’ FEES 12000
DEPRECIATION ON BANK PROPERTY 19500
PRINTING AND STATIONERY 12000
ADVERTISEMENT 1500
POSTAGES AND TELEGRAMS 3000
OTHER EXPENSES 4500
TOTAL 270000

STATE BANK OF TRANVANCORE

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH, 2017
PATICULARS SCHEDULE NO. Rs.
(I) INCOME
INTEREST INCOME 13 1475000
OTHER INCOME 14 195000
TOTAL 1670000
(II) EXPENDITURE
INTEREST EXPENDED 15 525000
OPERATING EXPENSES 16 270000
PROVISIONS AND CONTINGENCIES 60000
(DOUBTFUL DEBTS + INCOME
TAX)
(20000 + 40000)
TOTAL 855000
(III) PROFIT/LOSS
NET PROFIT (I-II) 815000
ADD: PROFIT & LOSS BROUGHT FORWARD NIL
TOTAL 815000
(IV) APPROPRIATIONS:
TRANSFER TO STATUTORY RESERVE (25%) 203750
BALANCE CARRIED TO BALANCE SHEET 611250
TOTAL 815000