Question

The bank has a 10% reserve requirement. Record each transaction in the category it belongs in. Carry forward the information from the previous transaction. The categories you will use are those included below.
Eli has $5,000 in cash and decides that he needs to open a checking account at Main Street Bank.
Assets Liabilities
Required Reserves - 500
Excess Reserves -
Loans - 4500 Checkable Deposits - 5000

Answer 1

Answer:

ASSETS

Required Reserves $500

Excess Reserves $5,000

Loans $5,000

LIABILITIES

Checkable Deposits $4,500

Explanation:

Based on the information given in a situation where Eli has the amount of $5,000 in cash in which he decided that he will needs to open a checking account which means that the category to Record this transaction will be:

ASSETS

Required Reserves $500

(10% reserve requirement *$5,000 Cash)

Excess Reserves $5,000

Loans $5,000

LIABILITIES

Checkable Deposits $4,500

[$5,000-(10% reserve requirement *$5,000 Cash)]

($5,000-$500)

=$4,500