You are given the balance sheet of Thorp Bank below

Assets Liabilities Liabilities

Cash$6 million Demand deposits$10 million

Savings accounts$16 million Savings accounts$16 million

Stockholders' equity$14 million Stockholders' equity$14 million

Suppose Throp Bank has $4 million in bad loans. The value of these loans becomes zero.

a)After charging-off the bad loans, how is the balance sheet of this bank affected?

Show on the table below.(Show Calculations)

Assets Liabilities

Cash___________Demand deposits____________

Loans___________ Savings accounts____________

Buildings_________ Stockholders' equity__________

b)After charging off the bad loans, does Thorp Bank become insolvent?