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Assets Liabilities and Net Worth (1) (2) Reserves P220,000 Securities 380,000 Loans Checkable Deposits P1,000,000 400,000 A. Determine the maximum amount of new loans that this bank can columns 1 and 1' how the bank's balance sheet will appear after this additional amount. B. What is the immediate effect of the transaction? (1.e., by how mu of money changed?) C. Show how the bank's balance sheet appear after checks drawn amount of the new loans have been cleared against the bank. Pr columns 2 and 2' D. Answer questions A, B, and C on the assumption that the reserv D.1 Determine the maximum amount of new loans that this bank Present in columns 1 and 1' how the bank's balance sheet will a bank has lent this additional amount. Assets Liabilities and Net Worth (1) (2) Reserves P220,000 Securities 380,000 400,000 Checkable Deposits P1,000,000 Loans D.2 By how much has the supply of money changed? D.3 Show how the bank's balance sheet appear after checks dra amount of the new loans have been cleared against the bank. Pr columns 2 and 2'.

Assets Liabilities and Net Worth (1) (2) Reserves P220,000 Securities 380,000 Loans Checkable Deposits P1,000,000 400,000 A. Determine the maximum amount of new loans that this bank can columns 1 and 1' how the bank's balance sheet will appear after this additional amount. B. What is the immediate effect of the transaction? (1.e., by how mu of money changed?) C. Show how the bank's balance sheet appear after checks drawn amount of the new loans have been cleared against the bank. Pr columns 2 and 2' D. Answer questions A, B, and C on the assumption that the reserv D.1 Determine the maximum amount of new loans that this bank Present in columns 1 and 1' how the bank's balance sheet will a bank has lent this additional amount. Assets Liabilities and Net Worth (1) (2) Reserves P220,000 Securities 380,000 400,000 Checkable Deposits P1,000,000 Loans D.2 By how much has the supply of money changed? D.3 Show how the bank's balance sheet appear after checks dra amount of the new loans have been cleared against the bank. Pr columns 2 and 2'.

FINANCIAL ACCOUNTING
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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Need answers for D. 1, D. 2, and D. 3

2. Consider the balance sheet of a bank below. Assume that the reserve ratio is 20%. Assets Liabilities and Net Worth (1) (2) (1') (2) Reserves P220,000 Securities 380,000 Loans Checkable Deposits P1,000,000 400,000 A. Determine the maximum amount of new loans that this bank can make. Present in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount. B. What is the immediate effect of the transaction? (1.e., by how much has the supply of money changed?) C. Show how the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank. Present this in columns 2 and 2' D. Answer questions A, B, and C on the assumption that the reserve ratio is 15%. D.1 Determine the maximum amount of new loans that this bank can make. Present in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount. Assets Liabilities and Net Worth (1) (2) (1') (2') Reserves P220,000 Securities 380,000 400,000 Checkable Deposits P1,000,000 Loans D.2 By how much has the supply of money changed? D.3 Show how the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank. Present this in columns 2 and 2'. Note: Show supporting calculations.
Transcribed Image Text:2. Consider the balance sheet of a bank below. Assume that the reserve ratio is 20%. Assets Liabilities and Net Worth (1) (2) (1') (2) Reserves P220,000 Securities 380,000 Loans Checkable Deposits P1,000,000 400,000 A. Determine the maximum amount of new loans that this bank can make. Present in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount. B. What is the immediate effect of the transaction? (1.e., by how much has the supply of money changed?) C. Show how the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank. Present this in columns 2 and 2' D. Answer questions A, B, and C on the assumption that the reserve ratio is 15%. D.1 Determine the maximum amount of new loans that this bank can make. Present in columns 1 and 1' how the bank's balance sheet will appear after the bank has lent this additional amount. Assets Liabilities and Net Worth (1) (2) (1') (2') Reserves P220,000 Securities 380,000 400,000 Checkable Deposits P1,000,000 Loans D.2 By how much has the supply of money changed? D.3 Show how the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cleared against the bank. Present this in columns 2 and 2'. Note: Show supporting calculations.
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