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The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the (1) 90,000 $ 710,000 250,000 350,000 1,400,000 (2) Liabilities / Equity Demand deposits Shareholders' equity Total $900,000 $ 500,000 $1,400,000 (1) 900,000 $ 500,000 1,400,000 (2)

The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the (1) 90,000 $ 710,000 250,000 350,000 1,400,000 (2) Liabilities / Equity Demand deposits Shareholders' equity Total $900,000 $ 500,000 $1,400,000 (1) 900,000 $ 500,000 1,400,000 (2)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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raw 11 The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. 30 Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 (1) 90,000 $ 710,000 250,000 350,000 1,400,000 Reserves (2) $1,200,000 $ a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. Liabilities / Equity Demand deposits Shareholders' equity Total < Prev c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. Search The bank is now over-reserved by $30,000 d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs Bank. Show the resulting balance sheet in columns (2) in the table above. e. The Bank now has excess reserves of $30,000 Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented in the table below. Assume that each of the other banks also has a target reserve ratio of 10%. Assets (1 all) Liabilities / Equity Demand deposits 11 of 14 222 $900,000 $ 500,000 Next > 9 $1,400,000 $9,000,000 $ (1 311) (1) 900,000 $ 500,000 1,400,000 (2) He
Transcribed Image Text:raw 11 The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. 30 Reserves Loans Assets Securities Fixed assets Total $120,000 $ 680,000 250,000 350,000 $1,400,000 (1) 90,000 $ 710,000 250,000 350,000 1,400,000 Reserves (2) $1,200,000 $ a. This bank is over-reserved by $30,000 b. Suppose that a loan, in the amount of the excess reserves found in part (a), is made to Sats Mundin. Show the resulting balance sheet in columns (1) in the table above. Liabilities / Equity Demand deposits Shareholders' equity Total < Prev c. Suppose that Sats immediately spends all of his loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. Search The bank is now over-reserved by $30,000 d. Suppose, instead, that the bank makes a loan for the amount in your answer in part (a), which then clears against the Maple Leafs Bank. Show the resulting balance sheet in columns (2) in the table above. e. The Bank now has excess reserves of $30,000 Suppose that there are a total of 9 other banks in the economy and that the balance sheet for the whole banking system is presented in the table below. Assume that each of the other banks also has a target reserve ratio of 10%. Assets (1 all) Liabilities / Equity Demand deposits 11 of 14 222 $900,000 $ 500,000 Next > 9 $1,400,000 $9,000,000 $ (1 311) (1) 900,000 $ 500,000 1,400,000 (2) He
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