Question

QUESTION 24

At the beginning of first quarter 2020, the bank buys a trading security for $150. At the end of the first quarter the price is $170. The bank sells the security at $180 at the end of the second quarter 2020.

During the first quarter 2020 (i.e. between the start and the end of the first quarter) , the bank shareholders' equity ______________, the retained profit ___________________ and the capital reserve _____________________..

	A.	did not change; did not change; did not change
	B.	increased by $20; did not change; increased by $20
	C.	increased by $10; increased by $30; decreased by $20
	D.	increased by $20; increased by $20; did not change;
	E.	increased by $30; increased by $10; increased by $20

QUESTION 25

Keele Bank's lending provisions (for bad and doubtful debt) in its balance sheet as at the 1/1/2018 is $87.6 million.

Keele Bank predicts that $36.8 million of its existing pool of loans will be written off throughout 2018.

Assuming that Keele Bank's prediction is correct, what charge for bad and doubtful debts is required in 2018 to bring the lending provisions to a desired level of $100 million at the end of 2018?

Express your result in $millions. You must not type $ sign or comas. You must round your result to ONE decimal when your answer is expressed in $millions. If your result is $10.530 million, you will be required to type 10.5.

_______________

Answer 1

QUESTION 24

At the beginning of first quarter 2020, the bank buys a trading security for $150. At the end of the first quarter the price is $170. The bank sells the security at $180 at the end of the second quarter 2020.

During the first quarter 2020 (i.e. between the start and the end of the first quarter) , the bank shareholders' equity ______________, the retained profit ___________________ and the capital reserve _____________________..

Answer :

D.	increased by $20; increased by $20; did not change;

Please note i have answered first question as per policy. Thanks.

As the given security is trading secuirty loss or gains will be flow in balance sheet. Retained earnings will increase by the change in price of security which results in change in shareholders equity. But it will not have impact on capital reserve.