Challenge problem. assume that the public in the small country of sylvania does not hold any cash. commercial banks, however, hold 10 percent of their checking deposits as excess reserves, regardless of the interest rate. in the questions that follow, the "money multiplier" is given by 1 divided by (rr plus upper e upper r ), where rr = the percentage of deposits that banks are required to keep as reserves er = the percentage of deposits that banks voluntarily hold as excess reserves consider the balance sheet of one of several identical banks:

Transactions that affect earnings do not necessarily affect cash. identify the effect, if any, that each of the following transactions would have upon cash and net income. the first transaction has been completed as an example. (if an amount reduces the account balance then enter with negative sign preceding the number e.g. -15,000 or parentheses e.g. (15, cash net income (a) purchased $120 of supplies for cash. –$120 $0 (b) recorded an adjustment to record use of $35 of the above supplies. (c) made sales of $1,370, all on account. (d) received $700 from customers in payment of their accounts. (e) purchased equipment for cash, $2,450. (f) recorded depreciation of building for period used, $740. click if you would like to show work for this question: open show work