Question

On November 1, 2017, the account balances of Schilling Equipment Repair were as follows

No. Debits No. Credits
101 Cash $2,350 154 Accumulated Depreciation-Equipment $2,200
112 Accounts Receivable 4,210 201 Accounts Payable 2,580
126 Supplies 1,750 209 Unearned Service revenue 1,200
153 Equipment 13,200 212 Salaries and Wages Payable 686
311 Common Stock 10,894
320 Retained 3,950
$21,510 $21,510

During November, the following summary transactions were completed.

Nov. 8 Paid $1,670 for salaries due employees, of which $686 is for October salaries.
10 Received $3,390 cash from customers on account.
12 Received $3,150 cash for services performed in November.
15 Purchased equipment on account $1,990.
17 Purchased supplies on account $690.
20 Paid creditors on account $690
22 Paid November rent $410
25 Paid salaries $1,670
27 Performed services on account and billed customers $1,880 for these services.
29 Received $620 from customers for future service.

Enter the November 1 balances on the ledger account.

Answer 1

Singleton Bank's loan to Hank's Auto Supply records as an asset on its balance sheet. Deposits and reserves increase at First National following the loan deposit. First National can loan out 90% of the new deposits while complying with a 10% reserve requirement.

Step-by-step explanation:

The student appears to be dealing with a practical accounting scenario related to the ledger account entries of Schilling Equipment Repair. However, the student has also provided additional context about how banks record loans on a balance sheet, which is an essential part of financial accounting. The presented scenario is a good example to illustrate how business transactions affect the financial statements of a company and how they reflect on banking operations.

When Singleton Bank lends $9 million to Hank's Auto Supply, the loan becomes an asset on Singleton's balance sheet since it is expected to generate interest income. Hank's Auto Supply deposits the cashier's check into their account at First National, increasing both the deposits and reserves of First National by $9 million. As per the reserve requirement, First National must retain 10% of this deposit as required reserves but is free to loan out the remainder. This transaction showcases the interplay between different financial statements and the regulatory requirements banks must adhere to.

Regarding the account balances for Schilling Equipment Repair, the student's question provides the starting balances and asks for a ledger account entry, but it does not request a specific action or further explanation, thus making it potentially incomplete.