Q. 20 What happens to reserves at the ... [FREE SOLUTION]

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Chapter 9: Q. 20 (page 264)

What happens to reserves at the First National Bank if one person withdraws $$1, 100$ of cash and another person deposits $$ 200$ of cash? Use T-accounts to explain your answer.

Short Answer

Expert verified

By using T-account we get that

Assets - $$ 900$

Liabilities - $$ 900$

Step by step solution

concept Introduction

A T-account is a balance sheet that expresses the growth of deposits by tracking assets possessed by the bank and liabilities owed by the bank. Since balance sheets must balance, so too, must T- accounts. T-account entries on the asset side must be balanced by an offsetting asset or liability.

Explanation

Reserves drop by $$ 200$ . The T-account for the First National Bank is as follows:

First National Bank

Assets	Liabilities
Reserves - $$ 900$	Checkable Deposits - $$ 900$

Final answer

By using T-account we get that

Asset - $$ 900$

Liabilities - $$ 900$ .

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What happens to reserves at the First National Bank if one person withdraws $\(1, 100$ of cash and another person deposits $\) 200$ of cash? Use T-accounts to explain your answer.

Short Answer

Step by step solution

concept Introduction

Explanation

Final answer

One App. One Place for Learning.

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91影视

What happens to reserves at the First National Bank if one person withdraws \(1,100of cash and another person deposits\)200of cash? Use T-accounts to explain your answer.

Short Answer

Step by step solution

concept Introduction

Explanation

Final answer

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Economics Textbooks

Taxation Economics

Study anywhere. Anytime. Across all devices.

What happens to reserves at the First National Bank if one person withdraws $\(1, 100$ of cash and another person deposits $\) 200$ of cash? Use T-accounts to explain your answer.