Question

(a) The following information relates to Bank HSBC. Prepare the profit & loss account for the year ended 31/12/2018. ( 8 mark)

Particulars	OMR	Particulars	OMR
Interest on cash credit	892,000	Rent received	72,000
Depreciation on bank property	20,000	Exchange and commission	32,800
Salaries and allowances	218,800	Interest on fixed deposits	1,100,000
Postage	5,600	Interest on savings bank a/c	272,000
Sundry charges	4,000	Interest on overdraft	216,000
Director’s and auditor’s fee	16,800	Discount on bills discounted	780,000
Printing	8,000	Interest on current accounts	168,000
Law charges	3,600	Locker rent	1,400
Interest on loans	1,036,000	Transfer fee	2,800

Provide for statutory reserve 25% and transfer OMR 12,000 to general reserve.

(b) Calculate the net premium to be credited to Revenue a/c from the following data (1 mark)

Premium during the year end               OMR1,600,000

Reinsurance premium paid                    OMR 540,000

Reinsurance premium received              OMR 620,000

Bonus in reduction of premium (not yet adjusted)     OMR 20,000

(C)Compute the net commission to be debited to the revenue account, from the following information. (1mark)

Commission on direct business                 OMR 93,000

Commission on reinsurance accepted       OMR 40,000

Commission on reinsurance ceded             OMR 50,000

Answer 1

Part a   

  HSBC Bank

Profit& Loss Account

for the year 2018

(Value in OMR)

Particulars Amount Particulars Amount

To Depriciation on Bank Property 20,000 By Interest on Cash Credit 892,000

To Salaries & Allowances 218,800 By Interest on Loans 1,036,000

To Postage 5,600 By Rent Received 72,000

To Sundry Charges 4,000 By Exchange & Commision 32,800

To Director's & Auditor's Fee 16,800 By Interest on overdraft 216,000

To Printing 8,000 By Discount on bills discounted 780,000

To Law Charges 3,600 By Locker Rent 1,400

To Interest on Fixed Deposits 1,100,000 By Transfer Fee 2,800

To Interest on Saving Bank A/c 272,000

To Interest on current accounts 168,000   

To Net Profit 1,216,200      

Total 30,33,000 Total 30,33,000

Profit & Loss Appropriation A/c

Particulars Amount Particulas Amount

To Statutory Reserve 304,050    By Net Profit 1,216,200

To General Reserve 12,000

To Surplus carried to Balance 900,150

Sheet                

1,216,200   1,216,000

Part B

Premium during the year OMR1,600,000

Less:

Reinsurance premium paid                    OMR 540,000

Bonus in reduction of premium    OMR 20,000

OMR 1,040,000

PART C

Calculation of Net Commision

Commission on direct business OMR 93,000

Add: Commission on reinsurance accepted       OMR 40,000

Less:Commission on reinsurance ceded           OMR 50,000

OMR 83,000