Final answer:
A T-account balance sheet for the bank shows assets of $620, including reserves, government bonds, and loans. Liabilities are $400 from deposits, which when subtracted from the assets, result in a net worth of $220.
Step-by-step explanation:
Setting up a T-account balance sheet for a bank involves listing the bank's assets on one side and its liabilities and net worth (also known as equity) on the other. The assets of the bank include reserves, loans, and government bonds, whereas the liabilities primarily consist of deposits made by customers.
- Assets:
- Reserves: $50
- Government Bonds: $70
- Loans: $500
- Total Assets: $620
- Liabilities:
- Deposits: $400
- Net Worth (Equity): Total Assets - Deposits
- Net Worth (Equity): $620 - $400 = $220
The net worth of the bank is calculated by subtracting the total liabilities from the total assets. In this case, it amounts to a net worth of $220. This assumes that there are no other liabilities or equity components to consider.