Question

On December 31, the accounting records of Waldman Company

contain the following items (in random order): Accounts Payable
$8,000
Land 120,000
Common Stock 132,000
Building 84,000
Accounts Receivable

Answer 1

The T-account balance sheet for the bank shows assets including reserves, loans, and government bonds totaling $620, and liabilities consisting of deposits worth $400. To calculate the bank's net worth, we subtract the liabilities from the assets, resulting in a net worth of $220.

Step-by-step explanation:

Understanding a Bank's Balance Sheet

To create a bank's balance sheet using a T-account, we list the assets on one side and the liabilities and net worth (or equity) on the opposite side. The objective is to balance both sides, as the sum of liabilities and net worth should equal the total assets.

Bank's Balance Sheet

Assets:

• Reserves: $50
• Loans: $500
• Government Bonds: $70

Liabilities:

• Deposits: $400

To find the bank's net worth, we subtract the total liabilities from the total assets. Here, the total assets amount to $620 ($50 + $500 + $70), and the total liabilities are $400.

The net worth is therefore calculated as follows:

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

The bank's net worth is $220.