A working Example

s has been said, every transaction ultimately affects the bank's statement of condition by debit or credit. Refer again to the outline statement shown in the preceding chapter. A deposit of $1,000.00 is made, consisting of $200.00 cash, and checks as follows: $200.00 on the bank itself and $600.00 payable in another city. At the end of the day (assuming this to be the only deposit), on the liabilities side there is an increase of $800.00, all of which appears in the item "deposits" being the total $1,000.00, less the check for $200.00 which is charged to the account of the drawer. On the resource side, then, we must have a corresponding increase of $800.00, and this is made up by an increase in the cash of $200.00 and an increase of $600.00 in the item "due from banks." Or a transaction may appear on one side of the statement only. The bank has sold $5,000.00 of the bonds it owns. The bond item of resources would show a reduction of this amount, and either "cash" or "due from banks" would be increased, depending whether payment was made in cash or by check. If payment for the bonds is made with a check on the bank itself, both sides of the statement are affected, a corresponding reduction in deposits taking place.