Question

Diltex Farm Supply is located in a small town in the rural west: The accounts receivable balance, net of uncollectible accounts, at the end of December would be:

A. $82,000
B. $113,400
C. $60,000
D. $54,000

Answer 1

The bank's assets, including reserves, government bonds, and loans, total $620. Liabilities in the form of deposits total $400. By subtracting liabilities from assets, we determine the bank's net worth to be $220.

Step-by-step explanation:

Bank's T-account Balance Sheet and Net Worth Calculation

To set up the T-account balance sheet for the bank, we divide the sheet into two sides: assets on the left, and liabilities and equity on the right. The assets of the bank include its reserves and the loans it has made, as well as the government bonds it has purchased. Liabilities consist of the deposits from the bank's customers.

Assets:
- Reserves: $50
- Government Bonds: $70
- Loans: $500
Total Assets: $620

Liabilities:
- Deposits: $400
Equity or Net Worth: Total Assets - Total Liabilities

To calculate the bank's net worth, we subtract the total liabilities from the total assets. Thus, the net worth is $620 (total assets) - $400 (total liabilities) = $220. Therefore, the bank's net worth is $220.