In the tables that follow you will find consolidated balance sheets for the commercial banking system and the 12 Federal ReserveBanks. Use columns 1 through 3 to indicate how the balance sheets would read after each of transactions a to cis completed. Do notcumulate your answers; that is, analyze each transaction separately, starting in each case from the numbers provided. All accounts arein billions of dollars.Instructions: Enter your answers as a whole number.Consolidated Balance Sheet: All Commercial Banks12Assets:Reserves$ 34Securities58Loans62Liabilities and net worth:Checkable deposits$ 150Loans from the Federal Reserve BanksConsolidated Balance Sheet: 12 Federal Reserve Banks12Assets:Securities$ 60Loans to commercial banks4Liabilities and net worth:Reserves of commercial banks$ 34Treasury deposits3Federal Reserve Notes27 a. A decline in the discount rate prompts commercial banks to borrow an additional $3 billion from the Federal Reserve Banks. Showthe new balance sheet numbers in column 1 of each table.b. The Federal Reserve Banks sell $5 billion in securities to members of the public, who pay for the bonds with checks. Show the newbalance sheet numbers in column 2 of each table.c. The Federal Reserve Banks buy $4 billion of securities from commercial banks. Show the new balance sheet numbers in column 3of each table.d. Now review each of the above three transactions, asking yourself these three questions: (1) What change, if any, took place in themoney supply as a direct and immediate result of each transaction? (2) What increase or decrease in the commercial banks' reservestook place in each transaction? (3) Assuming a reserve ratio of 20 percent, what change in the money-creating potential of thecommercial banking system occurred as a result of each transaction?Transaction a.(1) The money supply (Click to select) v(2) Reserves (Click to select) v from $34 billion to $billion.(3) The money-creating potential (Click to select) v by $billion.Transaction b:(1) The money supply (Click to select) v by $| billion.(2) Reserves (Click to select) v from $34 billion to $billion.(3) The money-creating potential (Click to select) ♥ by $billion.Transaction c.(1) The money supply (Click to select) v(2) Reserves (Click to select) v from $34 billion to $billion.(3) The money-creating potential (Click to select) - by $billion.

1 2 3 Assets: Reserves 34 37 29 38 Securities 58 58 58 54 Loans 62 62 62 62…

Answered: a. A decline in the discount rate…

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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Complete the table below for the Third National Bank. You have to distinguish between a bank's assets and bank's liabilities. The figures in the table below are for the Third National Bank. All figures are in thousands of dollars. Assets Liabilities and Net Worth Stock Shares $ 420 $ _____ $ _____ Reserves 25 _____ _____ Property 300 ____ _____ Securities 100 ____ _____ Loans 100 ____ _____ Demand Deposits 105 ____ _____
Suppose that the company has a balance sheet as follows at the beginning of the year. In that single year, the following transactions occur. One of the customers pays his $1,400 amount of debt by check. The company immediately pays its $1,200 amount of debt by endorsing these checks. After a while, another customer pays $900 cash for an outstanding debt. The company deposits $800 of this amount to its bank. Then, the company decides to pay one half of its debts via EFT(electronic funds transfer), and the other half of its debts by issuing its own checks. Lastly, the payee cashes these checks from the bank. Assuming that there are no more transactions throughout the year, what would be the total asset at the end of that year?
The following data were gathered to use in reconciling the bank account of Conway Company:Balance per bank $23,900Balance per company records 8,700Bank service charges 50Deposit in transit 5,500Note collected by bank with $450 interest 9,450Outstanding checks 11,300a. What is the adjusted balance on the bank reconciliation?b. Journalize any necessary entries for Conway Company based on the bank reconciliation.
Horton Corporation is preparing a bank reconciliation and has identified the following potential reconciling items. For each item, indicate if it is (1) added to balance per bank statement, (2) deducted from balance per bank statement, (3) added to balance per books, or (4) deducted from balance per books. a.Deposit in transit $5,500. b.Bank service charges $25. c.Interest credited to Horton's account $31. d.Outstanding checks $7,422. e.NSF check returned $377 Use the information above for Horton Corporation. Prepare any entries necessary to make Horton's accounting records correct and complete.
Examine the balance sheet of commercial banks in the following table. Assets $ Billion % Total Liabilities and Net Worth $ Billion % Total Real assets Liabilities Equipment and premises $ 153.7 1.0 % Deposits $ 10,273.3 67.7 % Other real estate 28.9 0.2 Debt and other borrowed funds 963.0 6.3 Total real assets $ 182.6 1.2 % Federal funds and repurchase agreements 985.0 6.5 Other 912.0 6.0 Total liabilities $ 13,133.3 86.6 % Financial assets Cash $ 882.3 5.8 % Investment securities 5,032.1 33.2 Loans and leases 6,663.3 43.9 Other financial assets 1,207.2 8.0 Total financial assets $ 13,784.9 90.8 % Other assets Intangible assets $ 419.4 2.8 % Other 786.7 5.2…
Horton Corporation is preparing a bank reconciliation and has identified the following potential reconciling items. For each item, indicate if it is (1) added to balance per bank statement, (2) deducted from balance per bank statement,(3) added to balance per books, or (4) deducted from balance per books.(a) Deposit in transit $5,500. (d) Outstanding checks $7,422.(b) Bank service charges $25. (e) NSF check returned $377.(c) Interest credited to Horton’s account $31.
Using T-accounts, show what happens to checkabledeposits in the banking system when the Fed lends$1 million to the First National Bank
Suppose that Bank of America sells $10 million in Treasury bills to PNC Bank. Use T-accounts to show the effect of this transaction on the balance sheet of each bank Bank of America Assets Liabilities Reserves Securities PNC Bank Liabilities Reserves Securities
Bank Reconciliation Activity The accounting records and bank statement of Entity A shows the following information: (The attached picture) Additional Information:a. The payments of P2,000 and P50,000 shown on the bank statement pertain to the cost of checkbook requested from the bank and the monthly amortization of a bank loan,respectively. The loan payment includes payment for interest of P8,000. b. Deposits shown on the bank statement but not on the cash ledger represent collections of accounts receivable. Requirements:1. Prepare the bank reconciliation.2. Prepare the journal entries to record the adjusting entries on the books of Entity A.
The following data were gathered to use in reconciling the bank account of Eves Company: Balance per bank………………………………. $13,450Balance per company records……………….. 11,655Bank service charges…………………………. 45Deposit in transit ……………………………… 3,000NSF check ……………………………………… 1,800Outstanding checks……………………………. 6,640 a.What is the adjusted balance on the bank reconciliation? b. Journalize any necessary entries for Eves Company based on the bank reconciliation.
The following data were gathered to use in reconciling the bank account of Crystal Company: Balance per bank $28,240 Balance per company records 10,280 Bank service charges 60 Deposit in transit 6,500 Note collected by bank with $530 interest 11,170 Outstanding checks 13,350 Question Content Area a. What is the adjusted balance on the bank reconciliation?$fill in the blank 578d140ceffafc9_1 Question Content Area b. Journalize any necessary entries for Crystal Company based on the bank reconciliation. If an amount box does not require an entry, leave it blank. - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select - - Select -
The following data were collected to use in reconciling the bank account for Anderson Co.: Balance per bank statement...……...........….$23,900 Balance per company records (cash acct)…..8,700 Bank service charges...................................................50 Deposits in transit..................................................5,500 Note collected by bank with $450 interest..9,450 Outstanding checks..............................................11,300 a. How much is the correct or adjusted bank balance? b. How much is the correct or adjusted book balance? c. Prepare any necessary journal entries based on the bank reconciliations.

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