Answer for Banking

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End of chapter revision questions for the mid term exam Rose Ch5 Questions 3, 6, 7 Ch 6 Questions 4, 5, 9 Rose Ch 17 Questions 7, 8 Ch 12 Questions 3, 6 5-3.If you know the following figures:

|Total Interest Income |290 |Provision for Loan Loss |10 | |Total Interest Expense |205 |Income Taxes |15 | |Total Noninterest Income |27 |Dividends to Common |11 | |Total Noninterest Expense |40 | Shareholders | |

Please Calculate these items:

|Net Interest Income |85 |*Total Interest Income Less Total Interest Expense | |Net Noninterest Income |-13 |*Total Noninterest Income Less Total Noninterest Expense | |Pretax net operating income |62 |*Net Interest Income Plus Net Noninterest Income and PLL | |Net Income After Taxes |47 |*Pretax net operating income less PLL less Taxex | |Total Operating Revenues |317 |*Interest Income Plus Noninterest Income | |Total Operating Expenses |255 |*Interest Expenses Plus Noninterest Expenses Plus PLL | |Increases in Undivided Profit |36 |Net Income After Taxes Less Dividends |

5-6. For each of the following transactions, which items on a bank’s statement of income and expenses (Report of Income) would be affected?

a. Office supplies are purchase so the bank will have enough deposit slips and other necessary forms for customer and employee use next week.

This would be part of Additional noninterest expense and part of Total Noninterest Expense.

b. The bank sets aside funds to be contributed through its monthly payroll to the employee pension plan in the name of all of its eligible employees.

This would be part of Salaries and Benefits and part of Total Noninterest Expenses.

c. The bank posts the amount of interest earned on the savings account of one of its customers.

This would be part of Total Interest Expenses.

d. Management expects that among a series of real estate loans recently granted the default rate will probably be close to 3 percent.

This would be part of PLL to go into reserves for future bad debts.

e. Nr. And Mrs. Harold Jones just purchased a safety deposit box to hold their stock certificates and wills.

This would be part of Additional Noninterest Income and part of Total Noninterest Income

f. The bank colleges $1 million in interest payments from loans it made earlier this year to Intel Composition Corp.

This would be part of Total Interest Income

g. Hal Jones’s checking account is charged $30 for two of Hal’s checks that were returned for insufficient funds.

This would be part of Service Charges on Deposit Accounts and then part of Total Noninterest Income

h. The bank earns $5 million in interest on government securities it has held since the middle of last year.

This would be part of Total Interest Income.

i. The bank has to pay its $5000 monthly utility bill today to the local electric company.

This would be part of Premises and Equipment Expenses and part of Total Noninterest Expenses

j. A sale of government securities has just netted the bank a $290,000 capital gain (net of taxes).

This would be part of Security Gains (Losses)
5-9.See if you can determine the amount of Rosebush State Bank’s current net income after taxes from the figures below...
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