Question: Masoner Savings headquartered in a small community holds most of
Masoner Savings, headquartered in a small community, holds most of its correspondent deposits with Flagg Metrocenter Bank, a money center institution. When Masoner has a cash surplus in its correspondent deposit, Flagg automatically invests the surplus in Fed funds loans to other money center banks. A check of Masoner’s records this morning reveals a temporary surplus of $11 million for 48 hours. Flagg will loan this surplus for two business days to Secoro Central City Bank, which is in need of additional reserves. Please show the correct balance sheet entries to carry out this loan and to pay off the loan when its term ends.
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