Question

Related to Solved Problem 10.1 The following entries (in millions of dollars) are from the balance sheet of Rivendell National Bank (RNB) U.S. Treasury bills Demand deposits $18 $37 Mortgage-backed securities Loans from other banks $29 $10 C&I loans $46 Discount loans $9 NOW accounts $39 Savings accounts Reserve deposits with Federal Reserve $9 $6 Cash items in the process of collection $10 Municipal bonds Bank building $6 $5 Use the entries given above to construct the following balance sheet which is similar to the one displayed in the text Assets Liabilities Bank Capital

Answer 1

ANSWER:

ASSETS	Amount ($)	LIABILITIES + BANK CAPITAL	Amount ($)
US treasury bills	18	Demand deposits	37
Mortgage backed securities	29	Loan from other banks	10
C&I loans	46	NOW accounts	39
Discount loans	9	Saving accounts	9
Cash items in the process of collection	10
Municipal bonds	6	Reserve deposits with federal reserve	6
Bank building	5	Share capital	22
Total assets	123	Total liabilities	95
		Bank capital	28

Capital asset ratio = $28/$123 = 22.76%

Answer 2

ASSETS	Amount ($)	LIABILITIES + BANK CAPITAL	Amount ($)
US treasury bills	18	Demand deposits	37
Mortgage backed securities	29	Loan from other banks	10
C&I loans	46	NOW accounts	39
Reserve deposits with federal reserve	6	Saving accounts	9
Cash items in the process of collection	10	Discount loans	9
Municipal bonds	6
Bank building	5
Total assets	120	Total liabilities	104
		Bank capital	16

Capital asset ratio = $16/$120 = 13.33%