Compute the Drawing Power for Cash Credit A/c of Kirpa Limited for the month of March 2024 with following information: Particulars of current assets…
CA Intermediate · Auditing and Ethics · RTP · September 2024
Compute the Drawing Power for Cash Credit A/c of Kirpa Limited for the month of March 2024 with following information: Particulars of current assets Amount (₹) Stock 60,000 Debtors 55,000 (Including Debtor of 15,000 for an invoice dated 20.10.2023) Sundry creditors 10,000 Sanctioned Limit 48,000 Margin on stock is 30% and on debtors is 40%. Note: Debtors older than 3 months are ineligible for calculation of DP.
Suggested Answer and Working Notes:
Computation of Drawing Power (DP) for CC A/c of Kirpa Ltd. Particulars of current assets Amount (₹) DP Amt (₹) (A) Stocks: Stocks at realizable value 60,000 Less: Unpaid stocks: - Sundry creditors 10,000 10,000 Paid for stocks 50,000 Margin @ 30% 15,000 35,000 (B) Debtors: Total Debtors 55,000 Less: Ineligible debtors 15,000 Eligible debtors 40000 Margin @ 40% 16,000 24,000 Total Drawing Power 59,000 The sanctioned limit given in the question is 48,000 whereas drawing power as per the above working is 59,000. So, drawing power would be restricted to sanctioned limit i.e.,48,000/-.
Topics: Audit of Banks
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