Lesson No. 3 – GL

Now we will discuss some other asset class that appears in B/S or called as GLBB. All assets always show a Debit balance.
Some Assets-
Furniture and fixture (FF)
Stationery.
Stamped forms ( Obtained for agreement like safe vault or guarantee. They are nonjudicial stamp papers.
Suppose the br. acquire it with cash
Cash will go out go out.
Furniture (real asset) will come in
Hence entry will be
Debit Furniture ac
Credit Cash
(For real accounts Debit what comes in and Credit what goes out)
In fact there is a ledger containing individual a/cs of all individual ACS like Chairs, Tables, Counter, Almira's, Safe vault, Lockers, Fans,AC,Computers etc.Their combined Debit balance will be reflected as a single AC in GL(& GLBB) as Furniture and Fixture ac.

Similar will be the entries in respect of Stationery ac say
Computer Papers ac
Ledger Papers ac
Pens,Pencils ac
Their combined ac will reflect in GL as Stationery Ac .
On purchase the entry will be
Debit Cash
Credit Stationery ac
The principal applied will be for real ACS.

The GLBB or Day Book will look as
As at..............
Liabilities. | Assets
SB Dep. 8.00 Cash on 8.50
CD. 17.50| CashSBI.20.00
FD. 15.00|Furniture 10.00
| Stationery. 2.00
----------------------------------------------
Total. 40.50|Total. 40.50
-------------------------------------------------

Now remember as branch acquires deposits the liabilities will go up simultaneously equivalent amount of the Assets ac or SBI ac will go up because of deposit of cash and clearing.
However branch does not hold Cash beyond certain extent but will deposit it with SBI.The GLBB with rise in deposits and SBI ac will be like.

The GLBB or Day Book will look as
As at..............
Liabilities. | Assets
SB Dep. 328.00 | Cash on 8.50
CD. 117.50| SBI. 940.00
Furniture 10.00
FD. 515.00|Stationery. 2.00
----------------------------------------------
Total. 960.50|Total. 960.50
-------------------------------------------------
Thus deposits(liabilities) accrues and balanced by assets as Current ac of SBI. This amount is in fact not kept with SBI(no income is earned,).As such such funds are remitted to HO where it is deployed. Thus funds move from SBI ac to HO ac.
Debit HO ac Rs935.00
Credit SBI ac. Rs935.00
Both are real acs, as good as Cash as such the above entry.

The GLBB or Day Book will look as
As at..............
Liabilities. | Assets
SB Dep. 328.00 | Cash on 8.50
CD. 117.50| SBI. 5.00
Furniture 10.00
FD. 515.00|Stationery. 2.00
| HO ac. 935.00
----------------------------------------------
Total. 960.50|Total. 960.50
-------------------------------------------------
The HO ac has different nomenclatures as CO ac,Branch Clearing ac,Inter Br Clearing ac etc.

Suppose a proposal of customer for Demand Loan is received say from P for Rs50 lac against his FD of Rs60 lacs.The bank will open DL ac of 'P' in Demand Loan ledger. It is a personal ac.The amount will be received by P hence debit the receiver and amount will be paid from HO ac, it is a real ac hence Credited.
Dr DL ac P ,R's 50 lac
Cr Ho ac Rs50 lac
(The HO ac is an asset an it is in debit as such when amount will be credited it will reduce the debit balance).
Suppose the total amount under
1) The Demand loans Rs200
2) Term Loans. Rs 300
3)Cash Credit , Rs 250
4) Overdraft ac Rs.450
TOTAL. Rs.1200
Now the branch will call and get funds from HO.
Debit Loan ACCTS Rs.1200
Credit HO ac. Rs.1200
The HO ac entries will look
Particular. Dr. Cr. Bal
Opg. 0
From br X. 935. Dr 935*
From brX. 1200 Cr 265**
*Debit balance in branch GL/GLBB indicates branch has to receive or in a way loaned HO to that extent.This has happened as deposits are transferred to HO.
** Credit bal in HO ac indicates branch has borrowed funds from HO.
I am closing the discussion of the day; remember that flow in accounting entry is
Dr/ Cr Individual ac in ledger -> GL concerned Head -> GLBB (or Trial balance statement at day end.)

The GLBB or Day Book will look as
As at..............
Liabilities. | Assets
SB Dep. 328.00 | Cash on 8.50
CD. 117.50| SBI. 5.00
Furniture 10.00
FD. 515.00|Stationery. 2.00
| HO ac. 0.00
HO ac. 265 .00|DL. 200.00
| TL. 300.00
| CC. 250.00
| OD. 450.00
----------------------------------------------
Total. 1225.50|Total. 1225.50
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The individual accounts of Customers will be in Respective DL ledger
TL ledger
Cash Credit ledger
Overdraft ledger
(These ledgers are in virtual form but aggregate is reflected in the concerned DL/TL/CC/OD accounts in GL and GLBB or Trial Balances or B/S of the branch.)
I am closing the discussion of the day; remember that flow in accounting entries are
Dr/ Cr Individual ac in ledger -> GL concerned Head -> GLBB (or Trial balance at day end.).

I have written "Banking Beyond Books" a book based on my 40+ banking experiences. It is a guide to young bankers.SMS to me on 7350901500 for the book)

Thanks.
Waman Gokhale
7350901500
waman.gokhale @gmail.com