A government issues 10,000,00 of demand bonds and fails to obtain an acceptable takeout agreement from a bank. How should the entity recognize the bond proceeds in a government fund? A debit cash 10 million credit process from sale of demand bonds 10 million B debit process from sale of demand bond 10 million credit cash 10 million C debit cash 10 million credit bonds payable 10 million D debit bonds payable 10 million credit cash 10 million

A government issues 10,000,00 of demand bonds and fails to obtain an acceptable takeout agreement from a bank. How should the entity recognize the bond proceeds in a government fund? A debit cash 10 million credit process from sale of demand bonds 10 million B debit process from sale of demand bond 10 million credit cash 10 million C debit cash 10 million credit bonds payable 10 million D debit bonds payable 10 million credit cash 10 million

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A bank has the following assets: cash and government bonds of $34.43, government agency bonds of $27.44, mortgages of 65.51, and loans to individuals and corporations of 143.81. According to Basel 1, what is the ratio of the bank's risk-weighted assets to total assets? Express in % to the nearest 0.01%; drop the % symbol.
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Suppose the Federal Reserve sells a $3000 bond, and the reserve ratio maintained by all private banks is 20%. Assume that all loans are fully redeposited (zero “cash drains”) and that all deposits are checkable deposits. Determine the effect of the bond sale on total loans and deposits in the private banks. Explain in detail how these changes would occur. Illustrate the total result of the effects in part (1) using balance sheets for the consolidated private banks and the Federal Reserve, respectively. Discuss how the effects in part (1) would be different if: (i) the reserve ratio was 25% instead of 20%; (ii) a certain portion of loans were held as cash outside banks instead of being redeposited in the banks.
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You Answered Correct Answer A bank has $223 million in assets in the 0 percent risk-weight category. It has $363 million in assets in the 20 percent risk- weight category. It has $153 million in assets in the 50 percent risk-weight category and has $303 million in assets in the 100 percent risk-weight category. This bank has $13 million in Tier 1 capital and $17 million in Tier 2 capital. Is this Bank meeting Basel I requirement of 4% Tier 1 capital to risk-weighted assets (RWA)? No: Type 0 Yes: Type 1 If you type 0, Canvas may indicate the question is left unanswered. Disregard this message. Canvas will grade this question correctly. If the tier-1 capital to RWA is exactly 4%, type 0. 1 O margin of error +/- 2%