Question

2.15A

May
Write up the accounts to record the following transactions:
1 Started business with £1,500 cash and £18,000 in the bank.
2 Received a loan of £4,000 from T. Fox by cheque.
3 Bought a computer for cash £1,200.
5 Bought display stands on time from Drop Ltd £840.
8 Took f400 out of the bank and put it in the cash till.
15 Repaid part of Fox's loan using the business debit card £1,000.
17 Paid amount owing to Drop Ltd £840 by Internet transfer from the bank account.
24 Repaid part of Fox's loan by cash £E500.
31
Bought a colour laser printer on time from P. Blake for £400,

Answer 1

The T-account balance sheet for the hypothetical bank shows assets (reserves, government bonds, loans) totaling $620, and liabilities (deposits) of $400, resulting in a net worth of $220.

Step-by-step explanation:

Understanding the Bank's T-account Balance Sheet

To illustrate the accounting of a hypothetical bank, we will start with establishing a T-account balance sheet. On the balance sheet, we list assets on one side and liabilities along with the bank's net worth on the other. So, let's proceed with the given data:

Deposits: $400 (liability)

Reserves: $50 (asset)

Government bonds: $70 (asset)

Loans: $500 (asset)

The sum of assets is the addition of reserves, government bonds, and loans, which amounts to $620. The total liabilities are just the deposits, which are $400. To find the net worth, we subtract liabilities from assets:

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

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