Answer:
(a) Common shares outstanding after stock split:
= 1,000,000
(b) New par value per share = 0.01 × 20
= 0.2
(c) Since, there will be no change in the paid up capital after the reverse stock split. So, there is no need to record journal entry, as it will be accounted as the memorandum.
Answer:
The correct answer is $30 billions.
Explanation:
The checkable deposits are given as $140 billions.
The total reserves are $51 billions.
The required reserve rate is 30%.
The required reserves will be
=30% of $140 billions
=
=$42 billions
The excess reserves will be
=total reserves-required reserves
=$51-$42
=$9 billions
Maximum expansion by lending will be
=
=
=$30 billions
So, the money supply can be expanded by a maximum amount of $30 billions.