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.
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Municipal Finances A Handbook For Local Governments
Authors: Catherine D. Farvacque-Vitkovic, Mihaly Kopanyi
1st Edition
082139830X, 978-0821398302
