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For each of the following transactions, explain which of ABCs balance sheet account(s) would be affected and how (increase or decrease). The bank must write-off
For each of the following transactions, explain which of ABCs balance sheet account(s) would be affected and how (increase or decrease).
- The bank must write-off $20 Million in bad (i.e., unrecoverable) loans.
- Spooked by rumors of the banks financial difficulties, some customers close their accounts after withdrawing a total of $5 Million.
- The Fed intervenes to rescue this bank by buying $15 Million worth of the remaining the bad securities it has in its books.
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