Final answer:
In this scenario, Singleton Bank lends $9 million to Hank's Auto Supply, which impacts the balance sheets of both banks.
Step-by-step explanation:
The subject of this question is Business and the grade level is College.
In this scenario, Singleton Bank lends $9 million to Hank's Auto Supply. The bank records this loan on its balance sheet as an asset, as it will generate interest income for the bank. The loan officer issues Hank's Auto Supply a cashier's check for $9 million, which Hank then deposits into his regular checking account with First National. As a result, the deposits at First National increase by $9 million and its reserves also increase by $9 million.
This transaction impacts the balance sheets of both Singleton Bank and First National. Singleton Bank's assets change to include $1 million in reserves and a $9 million loan to Hank's Auto Supply, while its deposits remain at $10 million. First National's balance sheet shows an increase of $9 million in deposits and reserves.