Final answer:
To set up the T-account balance sheet, list the assets which include reserves, government bonds, and loans, and the liabilities, which in this case are the deposits. Subtract liabilities from assets to calculate the bank's net worth. The bank's net worth is found to be $220.
Step-by-step explanation:
Setting Up a T-Account Balance Sheet
When creating a T-account balance sheet for a bank, we record assets on one side and liabilities on the other. To calculate the bank's net worth, we also consider any bank capital. Here's what the balance sheet would look like based on the given details:
Assets
- Reserves: $50
- Government Bonds: $70
- Loans: $500
Liabilities
To determine the net worth of the bank, subtract the liabilities from the assets:
Net Worth = Total Assets - Total Liabilities
Net Worth = ($50 + $70 + $500) - ($400)
Net Worth = $620 - $400
Net Worth = $220
Therefore, the bank's net worth is $220.