Suppose that Ava withdraws $300 from her savings account at Second Bank. The reserve requirement facing Second Bank is 10%. Assu
me the bank does not wish to hold any excess reserves of new deposits. Use this information to complete the balance sheet below to show how Second Bank's assets and liabilities change when Ava withdraws the $300 from the bank.Instructions: include a negative sign if necessary. Assets Liabilities
Change in Reserves: $_____________ Change in Deposits: $_______________
Change in Loans: $_______________
The calculation of each element of the balance sheet is as follows:
Change in Reserves = Amount withdrawn by Ava * Reserve requirement faced by Second Bank = $300 * 10% = $30. This is a reduction and will be negative in the Second Bank's Balance Sheet.
Change in Deposits = Amount withdrawn by Ava = $300. This is a reduction and will be negative in the Second Bank's Balance Sheet.
Change in loan = Amount withdrawn by Ava - Change in Reserves = $300 - $30 = $270. This is a reduction and will be negative in the Second Bank's Balance Sheet.
Manufacturing cost can be regarded as the summation of the cost of consumed resources during the production of a product. It can be divided into
direct materials cost
✓ direct labor cost
✓ manufacturing overhead.
It should be noted that All manufacturing costs are assigned to units of product and all non-manufacturing costs are treated as period cost under absorption costing.
