Question

The following selected transactions for Concord Bryce Company are presented in journal form. 01 Date Ref. Debit Credit May 5 Account Titles and Explanation Accounts Receivable Service Revenue (Billed for services performed) 5,100 5,100 12 Cash 4.500 4.600 Acesunts Recevable Received cash in payment of account 15 Cash 3,200 3.200 Service Ravenue {Received cash for services performed Post the transactions to T-accounts and determine sach accounts statement lance. Poutantries in the order presented in the problem Cash > > << Accounts Receivable << Service Revenue

Answer 1

When the Fed conducts an open market purchase, it affects Acme Bank's balance sheet by increasing reserves, decreasing bonds, and increasing loans.

Step-by-step explanation:

When the Fed conducts an open market purchase by buying $10 million in Treasury bonds from Acme Bank, it will result in changes to Acme Bank's balance sheet. The initial balance sheet consists of Assets - reserves of $30, bonds of $50, and loans of $50; and Liabilities - deposits of $100 and equity of $30. After the open market purchase, the balance sheet will change as follows:

• The reserves will increase by $10 million to $40 million.
• The bonds will decrease by $10 million to $40 million.
• The loans will increase by $10 million to $60 million.
• The deposits will remain the same at $100 million.
• The equity will remain the same at $30 million.