A bank has a balance sheet as shown below. At the beginning of the month, the bank has $15,141,000 in its loan portfolio and $183,000 in the allowance for loan losses.

During the month, management estimates that an additional

$5,200 of loans will not be paid as promised. After another month, management feels there is no chance of recovering the loan and writes the $5,200 loan off its books. Assuming no other changes, show the bank’s balance sheet at the end of Month 1 and Month 2. (LG 12-4)

Assets Liabilities and Equity Securities $ 960,000 Deposits $17,088,000 Gross loans 15,141,000 Common stock 500,000 Less: Allowance for loan losses $ 183,000 Ret. earnings 1,612,000 Total equity 2,112,000 Net loans 14,958,000 Total $19,200,000 Other assets 3,282,000 Total assets $19,200,000 AppendixLO1