Here, we are going to prepare the balance sheet of Bank of Marienfield using the information given in the question..
- Formula for Total liabilities is <em>Capital + Checkable deposit + Loan from bank</em>
<u>Given Information</u>
Capital = $150 Million
Checkable deposit = $100 Million
Loan from bank= $50 Million
Total liabilities = $150 Million + $100 Million + $50 Million
Total liabilities = $300 Million
<u>Additional given Information</u>
Commercial loan = $150 Million
Investment in shares = $120 Million
Investment in Treasury bonds = $20 Million
Required reserve = Checkable deposit * Required reserve rate
Required reserve = $100 Million * 10%
Required reserve = $10 Million
Excess reserve = Total liabilities - (Commercial loan + Investment in shares + Investment in Treasury bonds + Required reserve)
Excess reserve = $300 Million - ($150 Million + $120 Million + $20 Million + $10 Million)
Excess reserve = $300 Million - $300 Million
Excess reserve = $0 Million
Balance sheet of Bank of Marienfield.
Assets Amount Liability Amount
Required reserves $10 million Bank capital $150 million
Excess Reserve $0 Checkable deposit $100 million
Commercial loan $150 million Loan from bank $50 million
Investment in shares $120 million
Invest. Treasury bond <u>$20 million </u> <u> </u>
Total <u>$300 million</u> Total <u>$300 million</u>
