Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratlo Is 20 percent.Assets(1)(2)Liabilities and net worth(1)(2')Reserves26,000Checkable deposits$ 100,000Securities38,000Loans36,000Instructions: Enter your answers as a whole number.a. What is the maximum amount of new loans that Big Bucks Bank can make?Using the table above, show In columns 1 and 1' how the bank's balance sheet wll appear after the bank has lent this additionalamount by Inserting the new values Into the gray shaded cells of the glven table.b. By how much has the money supply changed?C. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agalnst thebank? Show the new balance sheet in columns 2 and 2' by Inserting the new values Into the gray shaded cells of the given table.d. Using the original figures, revisit questions a, b, and cbased on the assumption that the reserve ratio is now 15 percent.Assets(3)(4)Liabilities and net worth(3')(4)Reserves26,000Checkable deposits$ 100,000Securities38,000Loans36,000What is the maximum amount of new loans that this bank can make?Show In columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new valuesInto the gray shaded cells of the glven table.By how much has the money supply changed?$How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agalnst thebank? Show the new balance sheet In columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the glventable.

Balance sheets are statements that are prepared by companies in order to know their financial…

Answered: (1) $ 20,000 38,000 36,000 %24

Business

Accounting

(1) $ 20,000 38,000 36,000 %24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratlo Is 20 percent.
Assets
(1)
(2)
Liabilities and net worth
(1)
(2')
Reserves
26,000
Checkable deposits
$ 100,000
Securities
38,000
Loans
36,000
Instructions: Enter your answers as a whole number.
a. What is the maximum amount of new loans that Big Bucks Bank can make?
Using the table above, show In columns 1 and 1' how the bank's balance sheet wll appear after the bank has lent this additional
amount by Inserting the new values Into the gray shaded cells of the glven table.
b. By how much has the money supply changed?
C. How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agalnst the
bank? Show the new balance sheet in columns 2 and 2' by Inserting the new values Into the gray shaded cells of the given table.
d. Using the original figures, revisit questions a, b, and cbased on the assumption that the reserve ratio is now 15 percent.
Assets
(3)
(4)
Liabilities and net worth
(3')
(4)
Reserves
26,000
Checkable deposits
$ 100,000
Securities
38,000
Loans
36,000
What is the maximum amount of new loans that this bank can make?
Show In columns 3 and 3' how the bank's balance sheet will appear after the bank has lent this additional amount. Add the new values
Into the gray shaded cells of the glven table.
By how much has the money supply changed?
$
How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared agalnst the
bank? Show the new balance sheet In columns 4 and 4' in the table above. Add the new values into the gray shaded cells of the glven
table.

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