The Following Accounts Appear in the Ledger of Bradley, Inc

question 216

Essay

The following accounts appear in the ledger of Bradley, Inc., after the books are closed at December 31, 2014.
Instructions
Prepare the stockholders' equity section at December 31, 2014, assuming that part of retained earnings is restricted for plant expansion in the amount of $200,000.

---

Definitions:

Simple Money Multiplier

The reciprocal of the required reserve ratio, or 1/r; the maximum multiple of fresh reserves by which the money supply can increase.

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve, either in their vaults or with the central bank, not to be used for loans.

Excess Reserves

The excess funds that a bank or financial institution maintains beyond the minimum mandated by regulatory bodies, creditors, or its own internal policies.

Money Supply

The total amount of money—cash, coins, and balances in bank accounts—in circulation within a country's economy at a specific time.