Question
Good Bank: Cash $200 Deposits $1,000 Good loans $1,000 Purchased funds $300 Bad Loans $380 Equity $280 Total $1,580 $1,580 Bad Bank: Cash $240 Bonds
| Good Bank: |
|
|
|
| Cash | $200 | Deposits | $1,000 |
| Good loans | $1,000 | Purchased funds | $300 |
| Bad Loans | $380 | Equity | $280 |
| Total | $1,580 |
| $1,580 |
| Bad Bank: |
|
|
|
| Cash | $240 | Bonds | $120 |
| Loans | 0 | Preferred stock | $40 |
|
|
| Common stock | $80 |
| Total | $240 |
| $240 |
a. Bad Bank buys the bad loans for $232. The proceeds of the loan sale are used by Good Bank to pay off purchased funds. What will be the total assets of Good Bank after the sale of the loans? show work.
b. Bad Bank buys the bad loans for $232. The proceeds of the loan sale are used by Good Bank to pay off purchased funds. What will be the amount of equity on the balance sheet of Good Bank after the sale of the loans? Show work.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Process To Profits Strategic Planning For A Growing Business
Authors: William Lasher
1st Edition
0324223870, 9780324223873
