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Calculate effects deposits and loans have on personal or bank assets and equities.

Balance sheet effect

A bank showed the following items (among other) on its balance sheet at January 1, 2000:

Cash $2,644,000,000
Total Deposits $41,644,000,000

1. Suppose you made a bank deposit of $1,000. How would each of the bank assets and equities be affected? How much would each of your personal assets and equities be affected? Be specific.

2. Suppose a branch makes a $900.000 loan at a local hospital for remodeling. What would be the effect on each of the branch's assets and equities immediately after the loan is made? Be specific.

3. Suppose you borrowed $10,000 from a trust company on a personal loan. How would such a transaction affect your personal assets and equities?

Solution Preview

1. Bank assets (cash) will increase by $1000 and equities (deposits) will increase by ...

Solution Summary

The solution provides a sentence or two in response to each question that answers the effects of transactions on both personal and bank activity.

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