Question

You have studied three transactions from week 10's first PPT. To complete this activity, please review lecture materials and Journal Entries for Transactions and T-account Guide. Complete the activity and submit it on D2L under assignment by 3/26/23. Three transactions: Transaction 1: January 2 The business borrows $30,000 of cash from a lender. They have five years to pay it back. Transaction 2: January 3. The owners invest $20,000 cash into the business. Transaction 3: January 4. The company repays $5,000 of the loan with cash. Guide

Answer 1

A bank's T-account balance sheet showcases its assets and liabilities. In this case, a bank has deposits of $400, reserves of $50, government bonds worth $70, and loans of $500. The bank's net worth can be calculated by subtracting liabilities from assets. In this scenario, the bank's net worth would be $30.

Step-by-step explanation:

A bank's T-account balance sheet showcases its assets and liabilities. In this case, a bank has deposits of $400, reserves of $50, government bonds worth $70, and loans of $500. Assets include deposits, reserves, and government bonds, while liabilities include loans. The bank's net worth can be calculated by subtracting liabilities from assets. In this scenario, the bank's net worth would be $30.

To calculate the net worth, we add up the assets (Reserves + Government Bonds + Loans) which equals $620. Then we subtract the liabilities (Deposits) which is $400. So, the bank's net worth is Assets - Liabilities, which comes out to be $220.