Suppose a Transaction Changes a Bank's Balance Sheet as Indicated

question 82

Multiple Choice

Suppose a transaction changes a bank's balance sheet as indicated in the following T-account,and the desired reserve ratio is 10 percent. As a result of the transaction,the bank can make a maximum loan of

• A)$0.
• B)$200.
• C)$1,800.
• D)$2,000.
• E)$20,000.

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Definitions:

Inventory Returns Estimated

An approximation of the value or volume of goods that will be returned from customers back to the inventory.

Sales Refund Payable

A liability account that holds funds reserved for future refunds to customers for returned goods.

Sales Returns

Goods returned by customers to the seller after the sale, which result in a reduction of revenue previously recognized.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenditure to the correct periods.