Final answer:
To correct the uncredited $350 deposit, it should be added to the bank's balance. A T-account balance sheet shows that with assets of $620 (reserves, government bonds, and loans) and liabilities of $400 (deposits), the bank's net worth is $220.
Step-by-step explanation:
Understanding the Bank's T-account Balance Sheet
To address the student's first question, when a bank fails to give credit for a $350 deposit, the true cash balance would be increased by that $350. So, the $350 must be added to the balance.
For the T-account balance sheet, we need to list the bank's assets and liabilities to determine its net worth. Here's how the T-account would look based on the information given:
- Assets
- Reserves: $50
- Government Bonds: $70
- Loans: $500
- Total Assets: $620
- Liabilities
- Deposits: $400
- Total Liabilities: $400
The bank's net worth can be calculated by subtracting the total liabilities from the total assets:
Net Worth = Total Assets - Total Liabilities
Net Worth = $620 - $400
Net Worth = $220
Thus, the bank's net worth is $220.