Question

The balance sheet for the newly formed ACME Bank is shown below.ACME Bank Balance Sheet 1Assets Liabilities and net worthReserves $151,000 Checkable deposits $140,000Property $275,000 Stock shares $286,000Required:
a. Toshi, the owner of Toshi's Produce, negotiates with the bank to obtain a $28,000 loan to buy a new delivery truck. The amount of the loan is added to the available balance of Toshi's checking account. Fill in the new values that will appear in the balance sheet immediately after the loan is finalized.ACME Bank Balance Sheet 2Assets Liabilities and net worthReserves ???? Checkable deposits ????Loans ???? Stock shares ????Property ????

Answer 1

Answer:

Explanation:

As the loan has not been used yet, it will stay in the Loan account of the bank. The balances on the books for ACME will therefore be,

Reserves - $151,000.

It does not change as loan has not been used yet. If Toshi was to use loan then this figure will reduce because withdrawals are given from the Bank reserves.

Checkable Deposits will increase by the loan amount as that was where Toshi was credited to.

= 140,000 + 28,000

= $168,000

Loans - $28,000

The bank will now have a loan balance of $28,000 on its debit side to reflect the loan it just gave out.

Stock Shares - $286,000.

Not affected by the transaction.

Property - $275,000

Not affected by the transaction.