Assume the Continental National Bank's Balance Statement Is as Follows

Assume the Continental National Bank's balance statement is as follows: $\begin{array}{c}\begin{array}{lll}\quad\quad\quad\underline{\text { Assets}}\\\text { Reserves}\\\text { Loans}\\\text { Securities} \end{array}\begin{array}{l}\\\$ 40,000 \\25,000 \\110,000 \\\end{array}\begin{array}{lll}\quad\quad \underline{\text { Liabilities \& Net Worth }}\\\text { Checkable Deposits}\\\text { Stock Shares}\\\\\end{array}\begin{array}{lll}\\\$130,000\\45,000\\\\\end{array}\end{array}$

Assuming a legal reserve ratio of 20 percent,how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?

A) $3,000.
B) $24,000.
C) $6,000.
D) $16,000.

Correct Answer:

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