The balance sheet for the newly formed ACME Bank is shown below. The reserves li

Question

The balance sheet for the newly formed ACME Bank is shown below. The reserves listed on the balance sheet are reserves on deposit at the Federal Reserve. The cash ts the vault cash held in the bank. Instructions: Enter your answers as whole numbers a. Fill in the missing value in the balance sheet ACME Bank Balance Sheet ssets Cash Reserves Property Liablities and net worth 5,000lCheckable 98,000 S 98,000 Stock shares220,000 deposits b. If the reserve requirement is 10 percent, how much in excess reserves is the bank holding?

Explanation / Answer

Assets always equal liabilities.

Liabilities= 98000+220000=318000

Property= 318000-98000-5000= 215000

If required reserves ratio is 10% or 0.10, required reserves= 0.10* checkable deposits

= 0.10*98000=9800

Excess reserves= reserves - required reserves

= 98000-9800= 88200

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