Sign California Banking Profit And Loss Statement Computer

Industry sign banking california profit and loss statement computer

hello students in this video lecture i will explain to you how to prepare the balance sheet and profit loss account of a banking company as per the prescribed breastfed format in banking regulation at 1949 let's begin now this is the example now here we have the trial balance and at the foot of the trial balance there are four adjustments adjustment number one is provide dividend discounted then make provision for doubtful debts then at risk capitalism of this bank and we have to make a provision for taxation deserve okay now we must prepare the violation of banking company as per form a now uh under the heading capital libraries there are five schedules and under the heading of assets there are six schedules from 6 to 11 and after that number 12 is of contingent liabilities and bills for collection is uh is mentioned there as a footnote of the balance sheet now form b it is of profit loss account now there are four parts in this form income expenditure profit and appropriation under the category of income there are two schedules 13 and 14 of income then here under the category of expenditure there are two shuttles 15 and 16 and provisions and contingencies is also part of expenditure next here we have to find out the profit of the current year i mean that profit previous year's profit will be added to find out the total profit total lifetime profit of a bank then here the profit is appropriated in this part profit is appropriated but as far as schedule number 13 is concerned let me tell you it is income earned here we are supposed to mention the interest related income of a bank now schedule number 15 is the interest expended here we have to mention the interest related expenses of the bank and income other than interest received we must mention under schedule number 14 and yes just like that expenses other than interest paid we must mention under schedule number 16. okay let's begin with the solution uh now this is the trial balance let me tell you two important rules you see in the trial balance actually the closing balances of the ledgers are given now if such a if any ledger has a debit balances if energy has a debit balance then such a ledger would be either a set or expense if it is a set then as per the nature of the asset you have to select the appropriate ledger and in that appropriate legend you are supposed to mention that uh leisure and uh if uh if you think it is an expense um then under the heading expenditure we have here two shuttles so as per the nature of expense you have to select the appropriate ledger and if any ledger has a credit balance then such a ledger would be either income or liability if it is liability i i mean to say as per the properties of the ledger as per the nature of lecture if you think it is liability account then out of this five schedules you have to select the accurate schedule uh for recording social ledger and if if you think the ledger is a is an income account then mean that one is subscribe capital now see it has a credit balance now being the capital you know that it is in liability now here we have five schedules now in these five schedules you can now here we have five schedules but out of these five schedules the ideal schedule for mentioning capital is serial number one capital so here under the in uh schedule one capital here i am explaining mentioning that mentioning that capital but here we have adjustment i asked for the adjustment uh in the authorized capital of a company there are one like twenty thousand equity shares and the value of each share is rupees 10 so one like 20 000 into 10 it becomes 12 lakh 12 like this is your authorized capital but for calculation purpose we should know we are going to consider only subscribe capital so this is the authorized capital okay the next is in the problem reserve fund now it is also credit balance and it is also liability of a bank so out of this five schedules uh we should show it under schedule number two that is israel surplus so here i'm mentioning it under schedule number two next reservation surplus uh the figure is to like eighty one thousand two hundred and fifty so here to like eighty one thousand two hundred and fifty okay now next in the problem is loans cash credit and word draft now it has a debit balance and uh you know that uh through loan cash credit and overdraft bank offers credit facility to 44 125 okay the next in the problem is uh premises now it has also debit balance now it is also a set devices means building it is also a set now for mentioning building uh out of this six schedules the schedule number ten is the ideal for it we should mention it under schedule number ten that is fixer set okay go to schedule number ten now here next to premises so this value that is rupees eighty six thousand two hundred and next in the trial balance is uh indian government securities it is also debit balance it is also a set now uh out of this six shuttles uh which we we should mention in under schedule number eight that is investments so investments here uh indian government securities for like 50 000 now let me tell you one thing if you get a if you get adjustment like in the problem okay uh so the market value of indian government securities is let's say the four lakh and the book value is four four like fifty thousand in that case always show the market value in the inner column in a bracket and always consider the book value for the calculation in any case as far as indian government government securities are concerned okay next in the problem is current deposits let me tell you here see current deposits then next is the same time deposits uh and third is uh sorry current deposit fuse deposits and next is seven bank deposits now three these three ledgers have credit balances now uh there and these are the liability of a bank being a credit balance the liability of a bank and out of this five schedules uh we should show it under shuttle number three that is deposits so i will show it under children number three deposits deposits here only okay then next in the problem is uh salaries general expenses rent and taxes and director fees now these four ledgers have debit balances and all these four ledgers are expenses ledger expenses accounts and uh uh as you know none of the expenses related to in interest payment and that's why all these ledgers all these uh pledges we should show under schedule number 16 that is operating expenses operating expenses here now salaries 31 500 general expenses 37 375 rent and taxes 375 direct refuse 2250. let me tell you again as far as expenditures are concerned of a bank in schedule number 15 we should show the interest paid rejected expenses i mean to say interest paid on deposits by a bank to its clients or interest paid by bank on its borrowings so such expenses we should consider under schedule number 15 and expenses other than interest paid who should be considered under number 16 okay now next in the problem is profit and loss account as on first april 2019 now look here we are told to prepare financials 2034 smart 2020 and the beginning date of this accounting year is first april 2019 so here we have profit uh the opening profit of a bank of this financial year and at this profit we should show in form b i'm going to save profit loss account here in the third part next to profit brought forward here in the column of current year because this is last year profit brought forward okay now next in the problem is next is and discount received now see here the wording is interest and discount received it means what this bank has received interest and discount it means if this bank has received interest on its loans and it has received discounts uh by discounting bills so what is it it is an income of a bank it has a credit balance so being the income of a bank and it is received by a bank on account of interest and discount so we should show it understood number 13 let me tell you one more time that in schedule number 13 we should show banks interest rate incomes if bank is receiving income on account of interest then it should be shown in shadow number 13 and income other than interest must be shown in child number 14. okay now here interest and discount received the figure is one lakh forty thousand six twenty five okay next in the problem is stop of stationary now see stock of stationary now it has a debit balance so debit balance means about either asset or expense and it is an asset it is the closing stock of stationery in hand at the end of the accounting year so it should be shown uh in assets now as far as assets are concerned we have these six schedules and out of these six shuttles uh we can show it under schedule number eleven other assets so also number eleven other assets uh here stock of stationery okay next in the problem is now next is bill purchase and discounted it is also debit balance it has also debit balance it is an asset of a bank bill purchase and discounted actually it offers credit uh to the holder of a bill receivable so it is uh like advance of a bank social number nine so here we should mention it okay that is 51 000 750 okay next in the problem is uh now here we are interim dividend pair see interim dividend is paid now dividend is always paid through profit through profit and it is an appropriation of profit here in form b that is a format of a profit loss account uh in the fourth part here next to this point we should show it that is interim dividend paid okay just a minute and it will copy it 90 125 here we have to show it now next in the problem is shares of a company now it has also debit balance it is also an asset of a bank and uh out of this six schedules and and the nature of this is investment right shares of a company so it will go under the number eight investments the figure is fifty six thousand to fifteen number eight investments uh here okay now the next in the problem is uh cash in hand and balance with rpm so uh it it has debit balance it is also in a set of a bank so it will go under schedule number six that is cash and balances with rpa so here we should show it here okay i think let me copy it with this figure and uh here number six okay do like 13 000 750 okay now next in the problem is money at college short notice now it has also debit balance and uh it comes under schedule number seven balances with banks and money and college of countries actually monet college short notice are nothing but the inter bank loans if loan is given for one day then it is known as money call if loan is given on a condition that when whenever it is to be uh called back at least three days notice should be given then in such a condition uh it is known as money at short money so it is an asset of a bank it comes under number seven seven okay that is balances with banks and money for in short notice okay now next in the problem is uh interest rate now it has debit balance and it is it is liability sorry it is uh an expense of a bank it has a debit balance interest rate see in the world in the leisure only it is mentioned in respect and interesting expenses we should mention understandable number 15 so here understand interest paid figure so 56 000 250 next is now i think we are done with the postings of all these ledgers which are part of trial balance of this bank now let's discuss in detail all the adjustments now adjustment number one is provide a battle bill discount at one thousand one twenty five now you should know that bill discounted are the are nothing but the i mean to say debatable discounted are nothing but the unexpected discounts or it is that discount which is received in current year but but it is it is of next year that's why it is cannot be treated as an income of a current year if it is included in the interest and such income is if such a discount is included in the income of a bank in the current year then it should be it should be uh it should be deducted from the interest and discount account that's why the us entry should be passed now in such a situation the entry uh is passed like this interest and discount account table to rebuild be discounted therefore interesting from interest and discount account we should deduct such an expired discount because it is an income of next accounting year here here and we cannot treat the same as income of the current accounting here and if it is included in the current accounting year then it should be deducted that's why as it has come in in the problem as an adjustment uh therefore we should deduct it uh from interest and discount account additional number 13 and uh when when we pass enter like this that is interesting discount upon debit to rebuttal bill discounted account repaid or be discounted account is credited and that's why it closes with the credit balance and it appears in the balance sheet as a uh liability you should number five other lab design provisions in short if you get such a if you get this adjustment in the problem then you should provide uh two effects the first effect is you should detect it from schedule number 30 that is repetitively discounted the figure is 1125 that is total number thirteen one thousand one hundred and twenty five and the second effect it you should show it show the same amount initial number uh five other liabilities and provision because of credit balance it closes with uh closing credit balance and in the next accounting year this balance of 1125 will be added in the interest and discount account so in the in the current year we detected it from interest and discount account because it is the income of the next accounting year and in the next accounting year it will be treated as an income so this ledger balance 1225 will be treated as an income in next accounting year so in next accounting year it will be added in interest and discount account so control entry will be passed i'm going to say control victory is fast in this case so next is provide rupees 3375 okay for doubtful debts now in case of banking company doubtful debts means irrecoverable loan so on account of irrecoverable loan bank has made a provision of rupees 3 375. so uh because of this provision 3375 uh the advances will be reduced the advances will be reduced but this provision is usually shown in in under provisions and contingencies here so under provisions and contingencies we should show it here and the figure is 3375 and because of the and the second effect of it we have to detect it from the advances from the advances so here 3375 okay three thousand three hundred seventy five so these are the two effects of provision for bad and outfielder first show it under privileges and contingencies then deduct it from uh advances now here we have authorized capital we have already shown the effect of this adjustment finally we have to make a provision for taxation reserve same case now as we are making provision here we have to mention it under provisions and contingency the value is 9000 and and as it is made for the payment of tax in the future so it comes under schedule number five that is provision for uh um taxation reserve it comes under schedule number five that is also libraries and provisions now we are done with the uh all we are done with all the adjustments uh so let me tell you one more time uh japanese provision [Music] okay now let's close first form b that is profit loss account of a bank now i'll we will close first this ledger but we have to deduct this amount yes okay i'll deduct it okay now so is equal to here from rupees one lakh forty thousand six twenty five i'll deduct 1125 the figure is one like thirty nine thousand five hundred one like thirty nine thousand five hundred so mention this figure here now next to shadow number thirty nine next to the number thirty nine sorry next number 30 um and the amount is one like 39 500 okay it means details uh let me tell you one more thing the details are given in the schedules and summaries presented in forms that is form and form this is the summary of children number thirty this is the final figure of shift number three okay now number fourteen i mean channel number fourteen there is not a single item so therefore the in the income of this bank from the schedule is need the income is name okay the next challenge the problem is interest ex ended and the figure is six thousand to fifty so i'll this is the details the details finish at number fifteen interest related details and a summary we will show here fifty six thousand to fifty fifty six thousand two hundred fifty okay now next in the problem is children number 16 and the total of this figures sixty seven thousand five hundred so here sixty seven thousand five hundred sixty seven thousand five hundred next is uh provision contingency the total is twelve thousand three hundred seven seventy five let me say again half twelve thousand three hundred seventy five here so twelve thousand three hundred and seventy five now after that we will make a total of incomes first so here the total of incomes uh is one lakh thirty nine thousand five hundred and here the total is one like thirty six thousand one twenty five so as far as uh accounting year 1920 is concerned these banks total of income is one like thirty nine thousand five hundred so from the total we will deduct the total expenses of the bank so one lakh thirty six thousand one hundred and twenty five so the profit of the current year is three thousand seventy five three thousand three hundred seventy five sorry three thousand three hundred seventy 375 and the total of the total profit is of this bank 23 23 625 it means it is a lifetime profit of this bank 23 625 now as far as the application is concerned we have to make applications of this profit that is 23 600 625 is out of this profit we can make provision for we have to make appropriation of the profit from the total of the profit twenty three thousand six twenty five but as far as standard reserve is concerned we have to make provision of twenty five percent twenty five percent of uh current year profit what is the current profit three thousand three seventy five three thousand three hundred and uh seventy five and the figure is eight forty three so the round figure is eight hundred forty four so we we will transfer uh 844 that is 25 percent of current year profit to statutory reason let me tell you one more time here i calculated this figure on the current year figure i didn't consider the previous year profit as well as the total profit total profit i considered only current year profit for making provision to a statutory reserve that is 25 percent that is 844. now see out of this 23 625 out of these 23 625 19125 are used for the payment of dividend and 844 rupees transferred to saturday reserve therefore the remaining balance of profit is 3656 and it will be carried forward to uh balance sheet so and this saturday reserve we have to carry forward under ship number two that resident surplus and it also goes under schedule number two that is the resultant surplus let's first transfer uh statutory reserve that is 844 yes number two 844 844 now statutory reserve secretary reserve now now it is 25 percent 25 percent of 25 percent of current year profit current year profit that is rupees the current profit is uh 3375 so 300 so 3 375 okay now here and the next is we have to carry forward this figure uh balance can go to balance sheet and channel number two again here 3 656 3656 okay 3650 okay now now after closing the profit loss account let's close all the schedules of balance sheets okay capital number one is capital now here for the calculation purpose uh ignore the authorized capitals taking into consideration only authorized capital sorry um subscribe capital file next six two thousand five like six two thousand five hundred now the next is result and surplus so here the total of resident surplus is to like eighty five thousand seven fifty so here to like eighty five thousand seven fifty two like eighty five thousand seven hundred and fifty okay next in the next shuttle is deposits the total is three like thirty 39 375 so 3 lakh 39 000 375 okay next is now borrowings are new so here i'll type name and total of shadow number fifth is ten thousand one twenty five so here i'll write ten thousand one twenty five type it and type now let's make the total of uh libraries capital libraries it is 11 lakh 97 750 okay now let's make the total certificates uh giving in asset shuttles okay let's begin with channel number six the total is now two lakh thirteen thousand seven fifty okay like thirty thousand seven now schedule number seven the total of the shuttle is there's only one item so 90 000 ninety thousand so here i'll write i'll type here ninety thousand okay now the next is number eight investments investments the total is aggregate figure is fine like six thousand two hundred and fifty so here i'll write five lakh six thousand two hundred fifty okay then next is next is now here advances now first make addition of two lag forty four thousand one twenty five then add fifty one thousand seven hundred and fifty and then from this total deduct three thousand three hundred and seventy five so two lakh ninety two thousand five hundred are the net advances of this bank to like ninety two thousand five hundred so here next social number nine two like ninety two thousand 500 okay now next in the problem is uh fix i said there is only one fixer set and its value is eighty six thousand two fifty it is six thousand two hundred and fifty show here eighty six thousand two hundred and fifty it is six thousand two hundred and fifty now we have other assets uh i think other assets are there is one one particular another one leisure it is talk of system the value is 9000 okay the value is nine thousand here i'll mention nine thousand rupees let's add all the sets one by one okay eleven like ninety seven thousand seven fifty now you can see here the total of all the channels of liabilities is eleven like ninety seven thousand seven fifty and the total of all the schedules of assets is eleven like ninety seven thousand seven fifty so the total liabilities we can see that now that uh there is a perfect match between the total of liabilities and total of assets so balance sheet is valid this problem is solved i hope you understood how to uh prepare the balance sheet and profit loss support of a banking company now here the contingent balance is new there is no contingent liabilities so i'll mention here it's balance as a need let me tell you nothing uh the bills for collection is different from content and update okay thank you okay