Answer the next question based on the following balance sheet for the First Nati

Question

Answer the next question based on the following balance sheet for the First National Bank. Assume the reserve ratio is 10 percent Assets Liabilities+ Net Worth Reserves $50,000 Checkable Deposits $120,000 Loans Securities 25,000 Property 100,000 75,000 Stock Shares 130,000 27. Refer to the above data. If a check for $15,000 is drawn and cleared against this bank, its reserves and checkable deposits will be, respectively: A. $50,000 and $120,000 B. S50,000 and $105,000 C. $35,000 and $120,000 D. $35,000 and $105,000

Explanation / Answer

If a check for $15,000 is drawn and cleared against this bank then its reserves and checkable deposits will decrease by $15,000 as well.

At present, reserves of bank is $50,000 and checkable deposits are $120,000.

So, after clearence of check of $15,000, reserves would be ($50,000 - $15,000) $35,000 and checkable deposits would be ($120,000 - $15,000) $105,000.

Hence, the correct answer is the option (D).

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