Use the Information in This T-Account to Calculate This Bank's

question 20

Essay

Use the information in this T-account to calculate this bank's reserve ratio.Assume that the reserve requirement is 25%.Is this bank meeting this reserve requirement? Calculate the new reserve ratio if the loan recipients convert their checking account balances to cash and take the cash out of this bank.Is the bank still meeting its reserve requirement?
Assets
Liabilities
$50,000 (cash)
$50,000 (checking account balances)
$49,000 (loans)
$43,000 (loan recipients' checking account balances)

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Definitions:

Engineers

Professionals who apply scientific knowledge, mathematics, and ingenuity to develop solutions for technical, societal, and commercial problems.

Standard Prices

Predetermined prices used in budgeting and cost control procedures for valuing transactions and measuring cost variances.

Direct Materials Quantity Variances

The variance that occurs when the actual quantity of materials used in production differs from the expected quantity.