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25 November, 02:38

Using T-accounts show what happens to reserves at Security National Bank if one individual deposits $1,000 in cash into her checking account and another individual withdraws $750 in cash from her checking account.

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  1. 25 November, 02:49
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    Security National

    BankAssets Liabilities

    Reserves Checkable deposits

    +$250 + $250

    Explanation:

    When a customer deposits obey in their bank account their account balances (asset) increases and the liability (reserves) of the bank increases. The bank is now owing the customer money.

    For the first transaction

    Customer A account Bank reserves

    Debit $1,000 Credit $1,000

    Balance-$1,000 Balance + $1,000

    When the customer withdraws money the customer account (asset) reduces, and the bank reserve (liability) reduces. So there is a reduction in what they bank owes the customer.

    For the second transaction

    Bank reserves Customer B account

    B/F + $1,000

    Debit $750 Credit $750

    Balance+$250

    There for bank reserves have balance of + $250. It has a liability balance of $250
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