13.DodgeBank has the following items on its balance sheet£10m loans to corporations£5m loans to households£15m invested in government bonds£30m retail current account deposits (deposits by general public with DodgeBank)£5m commercial current account deposits (deposits by companies with DodgeBank)£10m tangible assets and property£ 5m cash in vaults£ 5m reserve deposits with Bank of England (deposits by Dodgebank)£10 borrowing by DodgeBank in money marketa) Construct a balance sheet for DodgeBank with each of the above items included.b) Calculate DodgeBank's net worth and show where it appears on the balance sheet.c) Which of DodgeBank balance sheet items should be included in a standard definitionof "bank money"?d) DodgeBank makes a personal loan of £10,000 to Ms Take, and credits her currentaccount with the amount of the loan. Describe the initial impact on DodgeBank'sbalance sheet, the money supply, and the net worth of both DodgeBank and Ms Take.e) Ms Take then withdraws £10,000 in cash and buys a second hand car from Mr Eyuswho immediately deposits it in his current account with another bank, RunBank. Whatis the impact on DodgeBank's balance sheet, and on the aggregate money supply?f) How would your answer change if Ms Take had paid by debit card?

A balance sheet refers to the form of a financial document that reflects the position of a company…

Answered: DodgeBank has the following items on…

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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