Question

Use the information presented in Southwestern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $150 Deposits $1,200 Loans $600 Debt $200 Securities $750 Capital (owners' equity) $100 Suppose a new customer adds $100 to his account at Southwestern Mutual Bank, which the owners of the bank then use to make $100 worth of new loans. This would increase the loans account and the account.

Answer 1

Southwestern Mutual Bank

This would increase the loans account and the deposit account by $100 respectively.

Step-by-step explanation:

a) Data and Calculations:

Southwestern Mutual Bank

Balance Sheet

Assets Liabilities and Owners' Equity

Reserves $150 Deposits $1,200

Loans $600 Debt $200

Securities $750 Capital (owners' equity) $100

Total assets $1,500 Total liabilities + equity $1,500

New customer deposit = $100

New loans made by the owners = $100