Question

The following table provides data for loan loss reserving on Mercantile bank’s balance sheet (in millions...

The following table provides data for loan loss reserving on Mercantile bank’s balance sheet (in millions USD).

Mar 2019

Jun 2019

Sep 2019

Dec 2019

Loan Assets

5,000

4,990

4,990

4,950

Loan-Loss Reserve, Contra Asset

100

90

100

70

Net Loans

4,900

4,900

4,890

4,880

Using data from the above table, which of the following statements is INCORRECT?

Select one:

a. Mercantile bank has no new write-offs between June and September 2019.

b. Mercantile bank has written off $10 million from its gross loans between March and June 2019.

c. Mercantile bank has written off $40 million from its gross loans between September and December 2019.

d. Mercantile bank has written off $30 million from its gross loans between September and December 2019.

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Answer #1

Answer : Correct Option is (d.) Mercantile bank has written off $30 million from its gross loans between September and December 2019.

Reason :

Mercantile has written off $40 million from its gross loans between September and December 2019 not 30 million . 30 million is the change in Loss Reserve and contra assets and not write off from Gross loan.Therefore Mercantile bank has written off $30 million from its gross loans between September and December 2019 is incorrect statement.

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