Question

Question B4. (15 marks) L+E 80 ESF & Cash Treasury Bonds FX, 10 USD, AUD/USDO.78 Loans Bank A 100.00 Deposits (Axel) 100.00 Deposits (all other customers) 12.82 1000.00 920 a) Copy the above balance sheet into your script and add the unique missing component. (2 marks) b) Show how each of the following transactions affect the above balance sheet. Axel transfers AUD 60 to Bill (who has an account at another bank). The bank collects AUD 20 interest (all borrowers have an account at the bank with sufficient funds). • Depositors of Bank A withdraw AUD 10 in cash. Depositors from Bank B withdraw AUD 5 from Bank A's ATM The exchange rate changes to AUD/USD 0.80 (Hint: What happened to the value of the AUD? USD? Does the bank make a profit or loss?) (10 marks)

Answer 1

Answer @ Balance sheet into . Assets AUD ESF or Cash | 600.00 you script and add the unique liabilities & Equity AUD Deposits | 80.00 Teaswey Benido 100.00 Deposits 420.00 (Alothes Custome) Eauity value =1212:82 1919-920-80 =212.82 Fx 1005D 12-82 212.82 Loans 100.00 Total 1212.821 1121282

③. The transactions affect the above balance sheep (1) Transfers AUD 60. to Bill This transaction will yeso oud Aseli deposit In Bank A.: 3 Since there is a culflow of funds from the Bank to another Bank Journal Entry. - Deposit Ale=Dr 280 ESF or cash ale = 80 (1) The bank collects Avo ao interest ... Interest is a from of income to Bank A so this will lead to an increase in equity of the Bank. it will lead to Aud no reduction from deposit Account

Journal Entry : Deposit Ale = 20 DV To interest income Ale = 20 each Ralle changes to Audlus08 AUD / USD has changed from 0.78 to os implying that AuD has appreciated in value against USD USD loans which were initially recorded . at 0.78 USD/AUD to AUD 12.82 will be restated o8 USD | AND making it Aup 12.5 Asseto' amounting to Add 0-32 (12.89 - 12:5) Journal Entry of Foren Loss AL=0.328 To FX LOOSD AL-0-32