The balance sheet for the newly formed Last National Bank is shown below. Reserves listed on the balance sheet are reserves on deposit at the Federal Reserve. Cash is vault cash held at the bank. Assets Cash Reserves Property Last National Bank Balance Sheet 1 Liabilities and net worth Assets Cash Reserves Property $ 8,000 Checkable deposits 140,000 Stock shares 295,000 $ Instructions: Enter your answers as a whole number. a. Suppose a depositor at the bank writes a check for $19,000 to pay a contractor for some remodeling work done on her home. The contractor deposits the check in his bank (which is a different bank). What will Last National Bank's balance sheet look like after the check clears? Record the values in the table below Last National Bank Balance Sheet 2 Liabilities and net worth Checkable deposits Stock shares 138.000 305,000 b. If the reserve requirement is 12 percent, what is the total amount of excess reserves held by Last National Bank after the check clears?

The balance sheet for the newly formed Last National Bank is shown below. Reserves listed on the balance sheet are reserves on deposit at the Federal Reserve. Cash is vault cash held at the bank. Assets Cash Reserves Property Last National Bank Balance Sheet 1 Liabilities and net worth Assets Cash Reserves Property $ 8,000 Checkable deposits 140,000 Stock shares 295,000 $ Instructions: Enter your answers as a whole number. a. Suppose a depositor at the bank writes a check for $19,000 to pay a contractor for some remodeling work done on her home. The contractor deposits the check in his bank (which is a different bank). What will Last National Bank's balance sheet look like after the check clears? Record the values in the table below Last National Bank Balance Sheet 2 Liabilities and net worth Checkable deposits Stock shares 138.000 305,000 b. If the reserve requirement is 12 percent, what is the total amount of excess reserves held by Last National Bank after the check clears?

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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The table gives information from a bank's balance sheet. Calculate the bank's loans, securities, and reserves. The bank's loans are $ million. The bank's securities are $ million. The bank's reserves are $ million. Item (millions of dollars) Checkable deposits 500 Savings deposits 600 Small time deposits 500 Loans to businesses 1,050 Government securities 500 Currency 20 Reserves at the Fed 30
Suppose that a bank holds cash in its vault of $1.4 million, short-term government securities of $12.4 million, privately issued money market instruments of $5.2 million, deposits at the Federal Reserve banks of $20.1 million, cash items in the process of collection of $0.6 million, and deposits placed with other banks of $16.4 million. How much in primary reserves does this bank hold? In secondary reserves?
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
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Unibank needs to review its liquidity position. According to the head of the division the following information applies: Existing liquid assets (eg. government securities, CDs, BAB) on the balance sheet: $30 million; Credit limit in the money market: $5 million; Existing available cash on the balance sheet: $3 million; Cash on balance sheet utilised in terms of existing daily operations and in terms of minimum regulatory reserve cash requirements: $1 million (part of the 3 million existing cash on the balance sheet); and Funds borrowed from the central bank with rediscounting facility: 1.5 million You are required to use the information above to calculate the net liquidity level of the bank and also provide conclusions about your calculation.
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