Final answer:
The account balances indicated by the question show two accounts with debit balances and two with credit balances. The items listed are categorized into M1 and M2 monetary supplies based on their liquidity. Lastly, to calculate a bank's net worth, you deduct total liabilities from the total assets shown in a T-account balance sheet.
This correct answer is none of the above.
Step-by-step explanation:
The question asks about the account balance as of a specific date and whether each account has a debit or a credit balance. The answers follow the normal accounting rules, where assets and expenses typically have debit balances, and liabilities, equity, and revenue typically have credit balances.
d) $1,250.75, cr. - This account has a credit balance of $1,250.75.
Furthermore, your question involves categorizing various items based on whether they are considered part of M1 or M2, or neither. M1 includes forms of money that are readily accessible for transactions, while M2 includes M1 plus savings deposits, small time deposits, and non-institutional money market funds.
a. Your $5,000 line of credit on your Bank of America card - Neither
e. $2000 you have in a money market account - M2
When setting up a T-account balance sheet for the bank, you will list the assets on one side and the liabilities on the other. In this scenario, to calculate the bank's net worth, you would subtract the total liabilities from the total assets. The T-account would look like this:
Assets:
-
- Reserves: $50
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- Government Bonds: $70
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- Loans: $500
Liabilities:
Net Worth = Total Assets - Total Liabilities = ($50 + $70 + $500) - $400 = $220
This correct answer is none of the above.