(a)

A Blue Chip company was given four different facilities for various reasons and the terms and conditions are as follows:

(i) An amount of GHS 34.0 million was approved and disbursed on 28th October, 2017 for the importation of heavy duty trucks. The loan was for a period of 24 months. As at 14th March,2020 the facility remains unpaid

(ii) The company was again granted an overdraft facility of GHS 20.0 million for 12 months after it was disbursed on 15th March, 2018 as a working capital. As at 18th March, 2020 the facility has not been paid and has become delinquent.

(iii) The third facility was a short term loan with a life span of 6 months. GHS 20.0million was disbursed on 31st March, 2016 and as at 31st December, 2017 the loan still remains unpaid.

(iv) The company was awarded a contract to by the Government of Ghana to execute the installation of telecommunication cables for National Communication Authority. This prompted the company to indent on the bank for a term loan of GHS 100.00 million. The loan was disbursed on 1st February, 2016 for 18 months. The company defaulted in the repayment of the facility and as at 31st December, 2019 the loan was still outstanding.

Required:

Calculate the Capital to Risk Assets Ratio assuming that:

1. Additional Tier 1 capital is GHS 15.0 million

2. Disclosed reserve is GHS 80.0 million

3. Preference/ Subordinated debt is GHS 39.0 million

4. Tier 2 capital is GHS 42.0 million. Assuming cost of borrowing is 20% for all

the loans

Would you as a credit analyst approve further sanctioning of credit facilities to your

(v)

cherished customers based on your answer? Explain.

2

Sub-total =10 marks

(b) KOYJOY Ltd. is a limited liability company that has maintained account with Larry

Commercial Bank ltd for the past twenty (20) years. The account has recorded an impressive turnover since its inception. They have enjoyed several facilities all of which has been paid on schedule.

Consider the following transactions on their account for the first half of the year 2019:

(i) On 2nd January,2019 the company deposited an amount of forty thousand

Ghana cedis

(ii) The company was awarded a contract to execute a road construction from

Kyebi to Obosomase at a contract sum of GHS 5 Million. On 2nd February, 2019 the company deposited an amount of GHS 2.0 Million out of their contract sum into their account, but withdrew GHS 1.0 Million on the same day.

(iii) A company by name Zipland Limited transferred an amount GHS 16,000 into their account on 18th February ,2019

(iv) The financial controller of the company paid into their account a cheque of GHS 1.05 Million drawn on Stanbic Bank Gh. Ltd on 25th February, 2019. The cheque was however cleared on 28th February ,2019

(v) KOYJOY Ltd was on 1st March,2019 allowed to withdraw GHS 3.0 Million from the account for the payment of employee salaries

(vi) A letter of credit of GHS 10.0 Million was approved in respect of KOYJOY Ltd. and paid a commission of 0.05% and a processing fee of 0.025% respectively on the L/C amount on 12th April, 2019.

(vii) A Deposit of GHS 100,000 was made on 20th May, 2019.

(viii) A cheque of GHS 100.000 was issued to a third party by KOYJOY on 6th June

to purchase office equipments for the company.

Required:

1. Construct a statement of accounts for KOYJOY Ltd. from 2nd January ,2019 to 30th June, 2019 (4 marks)

2. How would you describe the balance on the account as at 1st March, 2020? (2 marks)

3. What account type will allow such balance on the account? Name two features of this account. (1 mark)

3

4. Assuming that on 30th June 2019, the bank charged a COT of GHS 5,000.00 and debit interest of 10% on overdrawn balance as at 6th June, 2019.

(i) Determine the final balance on KOYJOYs account. (3 marks)