Accounting for Banks Problem 1 The following is the Trial Balance of Mercantile Bank Limited as on 31st December 2005:

Dr. Cr.
Accounts Title Money at Call on Short Notice Bills Discounted and Purchased Investments at cost: Government Securities Shares Debentures Other Securities Interest on Deposits Payment to Employees Postage and Telegrams Rent, Rates, Insurance, etc. Legal Charges Directors Fees Auditors Fees Premises at Cost Additions to Premises Repairs to Premises Stationery, Printing and Advertisements Stamps Other expenses of Business Cash in Hand Cash with Bangladesh Bank Cash with Other Banks Loans, Overdrafts and Cash Credits Inter Office Adjustments Silver Advance Payment of Tax Interest Accrued on Investments Interim Dividends Non-Banking Assets acquired in satisfaction of claims Amount ($) (000) 150 550 6100 650 200 500 200 215 5 11 2 2 1 5000 1000 60 72 3 15 62 1200 1100 5800 900 100 60 125 25 110 24218 24218 Accounts Title Share Capital Account (Authorized and Paid-Up): 10000 Shares of $100 each, $50 Paid-Up Statutory Reserve Fixed Deposit Account Savings Bank Deposits Current Accounts Reserve for Buildings Interest and Discount Commission, Brokerage and Exchange Rents Miscellaneous Receipts Accumulated Depreciation Premises Unclaimed Dividends Un-expired Discounts Borrowed from Banks Bills payable Profit and Loss Account Dividend Equalization Fund Amount ($) (000) 500 800 3000 2000 11000 500 650 60 20 61 4000 12 25 140 1000 150 300

Other Information: The Directors decided to reserve $1000 more for un-expired discounts. Bonus to staff is to be provided for $42000. The Directors decided to transfer Reserve for Building to Accumulated Depreciation -Premises Account as new premises have been completed. Out of loans to clients, a loan to the extent of $5000 is considered bad. All other loans and debtors are considered good.

Required: You are required to prepare Profit and Loss Account and Balance Sheet as at 31st December 2005 as required by the Banking Companies Act. Problem 2 One Bank Limited has derived the following Trial balance as on December 31, 2004: One Bank Limited Trial Balance December 31, 2004
Accounts Title Fixed Deposit Savings Deposit Current Accounts Money at Call on Short Notice Investments Interest Accrued and Paid Payment to Employees Rent, Taxes and Lighting General Expenses Proposed Dividend Premises (after charging depreciation of $50000 up to 31/12/2003) Cash in Hand Cash at Bangladesh Bank Cash at Other Banks Borrowed from Banks Share Capital: 5000 equity shares of $100 each, $50 paid Statutory Reserve Profit and Loss Account-Cr. Bills Payable Unclaimed Dividends Sundry Creditors Non Banking Assets Bills Discounted and Purchased Loans, Overdrafts and Cash Credits Interest and Discount Total Debit Amount ($, 000) Credit Amount ($, 000) 325 1775 3875

240 1550 100 40 10 5 25 600 75 705 520 480 250 150 130 400 5 25 120 250 3500 7740 325 7740

Rebate on Bills Discounted amounted to $2500. Allow 5% depreciation on premises on original cost. Provide $25000 for doubtful debt. Other Information: Bills for collection, $70,000 Acceptances on behalf of customers, $100,000 Required: Prepare the financial statements (only Income Statement and Balance Sheet) of the bank for the period ended then as per BRPD Circular No. 14 dated 25 June 2003 for general purpose financial reporting.

Problem 3 From the following trial balance of Oriental Bank Limited as on 30 th June 2005 and additional information, prepare a profit and loss account for the year ended then and a Balance Sheet on that date as per the format given in BRPD Circular no 14, dated 25 th June 2003 Dr. Cr.
ACCOUNTS TITLE Cash Balance Balance with Other Banks Cash with Bangladesh Bank Investment in Govt. Securities Bills Purchased and Discounted Cash Credits, Overdrafts and Demand Loans Term Loans Premises (Net) Furniture Interest Paid Salary Printing and Stationery Postage and Telegram Repairs Interest Accrued AMOUNT ($, 000) 200 400 100 300 100 250 1425 1275 1375 250 120 75 35 20 25 50 6000 ACCOUNTS TITLE Interest on Advances Interest from Investments Commission, Exchange and Brokerage Profit on Sale of Investments Other Revenue Receipts Share Capital Statutory Reserves Profit and Loss Account Fixed Deposits Savings Bank Deposits Current Accounts Borrowing from Other Banks Borrowing from Bangladesh Bank Bills Payable (Net) Interest Accrued AMOUNT ($, 000) 800 125 200 20 80 2000 900 650 275 325 125 300 100 25 75 6000

Additional Information: (1) Bills for Collection - $235,000 (2) Advances made have been classified as under: Loans Unclassified Classified Substandard Doubtful Bad/Loss 1000 Term Loans 875 Cash Credit, O/D, etc. 225

125 200 25 200 75 100 125 Total 1425 1275 250 No provision has been made so far. Made provision as per Bangladesh Bank requirement. (3) (4) (5) (6) Documentary credits and short-term trade-related transactions - $89,000. Acceptances and Endorsements - $135,000 Letters of Guarantee - $40,000 Irrevocable Letters of Credit - $2,350,000