Question

Use the following information to prepare a classified balance sheet for Alpha Co. at the end of Year 1. Accounts receivable $ 26,500 Accounts payable 12,200 Cash 20,500 Common stock 30,000 Land 10,000 Long-term notes payable 17,500 Merchandise inventory 26,300 Retained earnings 23,600

Answer 1

The T-account balance sheet for the bank shows the bank's assets, including reserves, government bonds, and loans, on one side, and its liabilities, which are the deposits, on the other. The bank's net worth is calculated as the difference between total assets ($620) and total liabilities ($400), resulting in a net worth of $220.

Step-by-step explanation:

T-Account Balance Sheet for a Bank

To create a T-account balance sheet for the bank, we must list the bank's assets on one side and its liabilities and equity on the other. The assets of the bank include its reserves, government bonds, and the loans it has made. Liabilities primarily include the deposits held at the bank. The net worth of the bank, which is also known as shareholder's equity, can be calculated by subtracting the total liabilities from the total assets.

Here is the T-account balance sheet for the bank:

Assets

Reserves: $50

Government Bonds: $70

Loans: $500

Liabilities

Deposits: $400

• 
  
• The equity or net worth is calculated by subtracting the total liabilities from the total assets:

Total Assets = Reserves + Bonds + Loans = $50 + $70 + $500 = $620

Total Liabilities = Deposits = $400

Net Worth = Total Assets - Total Liabilities = $620 - $400 = $220

Therefore, the bank's net worth is $220.