$\text { Gud Bank: }$ Bad Bank Buys the Bad Loans for $232

$\text { Gud Bank: }$

$\begin{array}{l}\begin{array}{lll}\text { Cash } & & \$ 200 \\ \text { Goodloans } & & \$ 1,000 \\ \text { Bad Loans } & & \$ 380 \\ \text { Total } & & \$ 1,580 \\ &\text { Bad Bank: } & \\ \text { Cash } & & \$ 240\\\text { Loans } & & 0 \\ \\\text { Total} & & \$ 240 \\\end{array}\begin{array}{lll}\text { Deposits} &\$ 1,000 \\ \text { Puychased funds} &\$ 300 \\ \text { Equity} &\$ 280 \\ & \$ 1,580 \\\\\text { Bonds} & \$ 120\\ \text { Preferred stock} &\$ 40 \\ \text { Common stock} &\$ 80 \\ & \$ 240 \end{array}\end{array}$

Bad Bank buys the bad loans for $232.The proceeds of the loan sale are used by Good Bank to pay off purchased funds.
What will be the amount of equity on the balance sheet of Good Bank after the sale of the loans?

A) $1,200.
B) $232.
C) $132.
D) $68.

Correct Answer:

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