Question
North Bank issues $50,000 capital notes to West Bank (transaction A) and issues $20,000 shares to Mr Williams (transaction B), a rich retiree who had
North Bank issues $50,000 capital notes to West Bank (transaction A) and issues $20,000 shares to Mr Williams (transaction B), a rich retiree who had received income on its past investments, income that he held in his transactional bank account in West Bank and used to buy the shares.
North Bank makes a $870,000 loan to its depositor Bob the Builder, a construction firm that needs to renew its stock of trucks. (transaction C)
a) Draw the changes in North banks balance sheet and in West Banks balance sheet resulting from transactions A, B and C. [Clearly indicate the name of the item affected in the balance, the change in the value and between brackets the letter of the transaction.]
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