NewBank started its first day of operations with $120 million in capital. A tota

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 $million

Explanation / 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

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