Banking and Balance Sheets- A Big Problem Complete all of the banking transactions using the T-accounts provided. The reserve requirement for this bank is 20%. You may use abbreviations for all entry titles. (RR, ER, DD, L) Formulas: Reserve Requirement=% of Demand Deposits held in reserve as required by the Fed Reserve Ratio= Total % Demand Deposits held in reserve as required by the Fed and Bank preference Definitions: Required Reserves = Demand Deposits x Reserve Requirement % Excess Reserves- Demand Deposits - Required Reserves - (Loans, Bonds, assets) Rules Right Side and Left Side must balance Checks may only be drawn on Demand Deposits Loans may only be made from Excess Reserves Reserves must be calculated at each transaction (T Account) Assets Liabilities Reserves Demand Deposits (DD) Required Reserves (RR) Excess Reserves (ER) Loans (L) Bonds (B) Property (P) Securities (s) All Transactions should use the following steps: 1. Execute the action. (Deposit, check drawn, loan, loan repayment) 2. Calculate the Reserve Requirement (RR) based upon the Demand Deposits (Right Side) 3. List the Required Reserves (RR, Left Side) 4. Subtract Required Reserves (RR) and any other asset holdings (L, B, P, S) from Demand Deposits (DD, Right Side) This equals Excess Reserves (ER) 5. List Excess Reserves (ER Left Side) This is the amount available for loans Question 2 1.5 pts There is a 20% Reserve Requirement These are cumulative questions- carry the values from the previous question Assets Liabilities $ $ RR (A DD Demand Deposit of $50,000 $ $ ER (Values are stated with a comma, no 5 sign, no decimals Ex 75.000) D Question 3 1.5 pts There is a 20% Reserve Requirement These are cumulative questions- carry the values from the previous question Assets Liabilities $ RR $ DD Check written for $25,000 $ $ ER Values are stated with a comma, no 5 l, no decimals Ex 75.000) Question 4 2 pts There is a 20% Reserve Requirement These are cumulative questions carry the values from the previous question Assets Liabilities $ $ RR $ DD A Loan is made for $50,000 $ ER $ Loans