NewBank started its first day of operations with $120 million in capital. A tota
ID: 2618643 • Letter: N
Question
NewBank started its first day of operations with $120 million in capital. A total of $96 million in checkable deposits is received. The bank makes a $27 million commercial loan and another $24 million in mortgage loans. The required reserve ratio is 6.4%. (Note: Information is based on NewBank's first month of operations.) Complete NewBank's balance sheet shown below: (Round your responses to the nearest whole number.) Assets Liabilities Required reserves Excess reserves Loans $million $million Smillion Checkable deposits Smillion Bank capital $millionExplanation / Answer
Assets
$ million
Liabilities
$ million
Required reserves
6
Checkable deposits
96
Excess reserves
159
Bank Capital
120
Loans
51
Total
216
Total
216
Notes:
Required reserves = Checkable deposits x Required reserve ratio
= 6.4% x 96 = 6 (rounding)
.
Total assets should be = 216 i.e equal to liabilities
Excess reserves = 216 – Required reserves – Loans = 159
Assets
$ million
Liabilities
$ million
Required reserves
6
Checkable deposits
96
Excess reserves
159
Bank Capital
120
Loans
51
Total
216
Total
216