Question

QUESTION 15 First Charter Bank Liabilities $2,000,000 Deposits $200,000 $1,800,000 $2,000,000 Assets Reserves Loans Total $2,000,000 Total Table 13.4 Refer to Table 13.4. If First Charter Bank earns a loss of $100,000, then: O owner's equity will decrease by $100,000. O deposits will decrease by $100,000. o owner's Equity will increase by $100,000. O deposits will increase by $100,000.

Answer 1

Q15 Losses result in reduction in owners' equity, hence the right answer is the first one (even if the owners' equity becomes negative)

Q16 Since required reserve is 40,000 and deposit is 500,000, the required reserve ratio is:

40000 / 500000 = 8%

Q17 Total of assets = Total loans + total reserves

1200000 = x + 150000

x = 1200000 - 150000 = 1050000

Hence total loans = 1050000