How much in excess reserves does each bank have

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Question: Suppose that National Bank of Guerneville (NBG) has $34 million in checkable deposits, Commonwealth Bank has $47 million in checkable deposits, and the required reserve ratio for checkable deposits is 10%. NBG has $4 million in reserves, and Commonwealth has $5 million in reserves.

(a) How much in excess reserves does each bank have?

(b) Now suppose that a customer of NBG writes a check for $1 million to a real estate broker who deposits the check at Common wealth. After the check clears, use T-accounts to show the effect of this transaction on the balance sheet of each bank. How much does each bank have in excess reserves?

Reference no: EM133327744

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