Assets Liabilities and Net Worth
Reserves $40,000 Checkable Deposits $130,000
Loans 25,000 Stock Shares 45,000
Securities 110,000
Assume the Continental National Bank's balance statement is as shown in the accompanying table. Assuming a legal reserve ratio of 20 percent, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?
a. $16,000.
b. $3,000.
c. $6,000.
d. $24,000.

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Respuesta :

JeanaShupp JeanaShupp · Answer 1 · 2020-08-01T05:01:42+02:00

Answer: c. $6,000.

Explanation:

Given: Checkable Deposits = $130,000

Amount Withdrawal = $10,000

Then, the new checkable deposit = (Checkable Deposits) - (Amount Withdrawal)

= $130,000-$10,000= $120,000

Reserves = 20% × (new checkable deposit)

=20% × $120,000 = $24,000

New reserve = (Reserve)-(Amount Withdrawal)

=$40,000 - $10,000 = $30,000

Excess Reserve = (New reserve) - (Reserves )

= $30,000 – $24,000 = $6,000

i.e. Excess reserve in bank is $6,000.

Hence, the correct answer is c. $6,000.