Final answer:
To balance the accounts when an asset is debited for $1,000 and a liability is credited for $500, a debit of $500 to an equity account is needed. Using the T-account methodology, a bank with $620 in assets and $400 in liabilities has a net worth of $220.
Step-by-step explanation:
When an accountant has debited an asset account for $1,000 and credited a liability account for $500, the accounts are not balanced, as the total debits ($1,000) do not equal total credits ($500). To balance this equation, you would need option b: Debit an equity account for $500. Doing this would bring the total debits and credits into balance, with the total being $1,000 on each side.
Now let's apply this knowledge to a T-account balance sheet for a bank. Here's a simple T-account for the bank based on the given information:
- Reserves: $50
- Government Bonds: $70
- Loans: $500
Assets Total: $620
Liabilities Total: $400
To calculate the net worth of the bank, you subtract total liabilities from total assets. Therefore:
Net Worth = Assets Total - Liabilities Total
Net Worth = $620 - $400 = $220
The bank's net worth is $220, which would be recorded on the liabilities side to balance the T-account.