Assets |Liabilities and US Treasury Bonds Reserves (Cash) $450,000 Net Worth $175,000 Checkable Loans $125,000

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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First National Bank
Liabilities and Net Worth
...
Assets
US Treasury Bonds
$450,000
Net Worth
$500,000
Reserves (Cash)
$175,000
Checkable Deposits
$250,000
Loans
$125,000
Second National Bank
Assets
Liabilities and Net Worth
US Treasury Bonds
$100,000
Net Worth
$250,000
Reserves (Cash)
$250,000
Checkable Deposits
$100,000
Third National Bank
Assets
Liabilities and Net Worth
US Treasury Bonds
$900,000
Net Worth
$1,000,000
Reserves (Cash)
$350,000
Checkable Deposits
$500,000
Loans
$250,000
The Required Reserve Ratio is 25% for all banks. Assuming
that all the customers that have outstanding loans have
used all of those additional funds to invest in new
machinery for their businesses (therefore, the amount of
Checkable Deposits is the true liability the bank has to its
customers), then the whole system (these three banks)
capable of creating $
(Do NOT enter the '$' in
your response. Enter a whole dollar amount; do NOT enter
cents.) in new loans.
Blank 1
Transcribed Image Text:First National Bank Liabilities and Net Worth ... Assets US Treasury Bonds $450,000 Net Worth $500,000 Reserves (Cash) $175,000 Checkable Deposits $250,000 Loans $125,000 Second National Bank Assets Liabilities and Net Worth US Treasury Bonds $100,000 Net Worth $250,000 Reserves (Cash) $250,000 Checkable Deposits $100,000 Third National Bank Assets Liabilities and Net Worth US Treasury Bonds $900,000 Net Worth $1,000,000 Reserves (Cash) $350,000 Checkable Deposits $500,000 Loans $250,000 The Required Reserve Ratio is 25% for all banks. Assuming that all the customers that have outstanding loans have used all of those additional funds to invest in new machinery for their businesses (therefore, the amount of Checkable Deposits is the true liability the bank has to its customers), then the whole system (these three banks) capable of creating $ (Do NOT enter the '$' in your response. Enter a whole dollar amount; do NOT enter cents.) in new loans. Blank 1
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