Question

Using T-accounts show what happens to reserves at Security National Bank if one individual deposits $1,000 in cash into her checking account and another individual withdraws $750 in cash from her checking account.

Answer 1

Answer:

Security National

BankAssets Liabilities

Reserves Checkable deposits

+$250 +$250

Explanation:

When a customer deposits obey in their bank account their account balances (asset) increases and the liability (reserves) of the bank increases. The bank is now owing the customer money.

For the first transaction

Customer A account Bank reserves

Debit $1,000 Credit $1,000

Balance-$1,000 Balance +$1,000

When the customer withdraws money the customer account (asset) reduces, and the bank reserve (liability) reduces. So there is a reduction in what they bank owes the customer.

For the second transaction

Bank reserves Customer B account

B/F +$1,000

Debit $750 Credit $750

Balance+$250

There for bank reserves have balance of +$250. It has a liability balance of $250