Big Bucks Bank. The reserve ratio is (1) (2) Liabilities and net wort 000$ 22.000 $ 22.000 Checkable deposits p00 38.000 38,000 p00 42.000 42,000 8 88

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The following balance sheet is for Big Bucks Bank. The reserve ratio is 20 percent.
Assets
(1)
(2)
Llabilities and net worth
(1)
(2)
$ 22,000 22.000$ 22,000 Checkable deposits
38.000
Reserves
$ 100.000 $ 102,000 $102.000
Securties
38,000
38,000
Loans
40,000
42,000
42,000
c How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cieared against the
bank? Show the new balance sheet in columns 2 and 2' by inserting the values into the gray shaded cells.
d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is 15 percent
Assets
(4)
Liabilities and nat worth
(4)
Reserves
$ 22,000
Checkable deposts
$ 100.000
Securities
38,000
Loans
40,000
What is the maximum amount of new loans that this bank can make?
Show in columns 3 and 3' how the bank's belance sheet will appear after the bank has lent this additional amount Add values into the
gray shaded cells of the table.
By how much has the money supply changed?
How will the bank's belance sheet appear after checks drawn for the entire amount of the new loans have been cleaned against the
bank? Show this new balance sheet in columns 4 and 4 Add values into the gray shaded cels of the table
Transcribed Image Text:The following balance sheet is for Big Bucks Bank. The reserve ratio is 20 percent. Assets (1) (2) Llabilities and net worth (1) (2) $ 22,000 22.000$ 22,000 Checkable deposits 38.000 Reserves $ 100.000 $ 102,000 $102.000 Securties 38,000 38,000 Loans 40,000 42,000 42,000 c How will the bank's balance sheet appear after checks drawn for the entire amount of the new loans have been cieared against the bank? Show the new balance sheet in columns 2 and 2' by inserting the values into the gray shaded cells. d. Using the original figures, revisit questions a, b, and c based on the assumption that the reserve ratio is 15 percent Assets (4) Liabilities and nat worth (4) Reserves $ 22,000 Checkable deposts $ 100.000 Securities 38,000 Loans 40,000 What is the maximum amount of new loans that this bank can make? Show in columns 3 and 3' how the bank's belance sheet will appear after the bank has lent this additional amount Add values into the gray shaded cells of the table. By how much has the money supply changed? How will the bank's belance sheet appear after checks drawn for the entire amount of the new loans have been cleaned against the bank? Show this new balance sheet in columns 4 and 4 Add values into the gray shaded cels of the table
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