Final answer:
Big Bucks Bank's assets include reserves of $50, government bonds of $70, and loans of $500. Its liabilities consist of deposits totaling $400. The bank's net worth, calculated by subtracting liabilities from assets, is $220.
Step-by-step explanation:
To determine the assets and liabilities for Big Bucks Bank, we need to set up a T-account balance sheet. The bank has deposits of $400, which are liabilities because the bank owes this money to its depositors. It holds reserves of $50, has purchased government bonds worth $70, and has made loans totaling $500. These items are part of the bank's assets because they are valuable resources the bank owns or controls.
The T-account balance sheet would look like this:
Assets
- Reserves: $50
- Government Bonds: $70
- Loans: $500
Liabilities
To calculate the bank's net worth, we subtract the total liabilities from the total assets. The bank's equity (net worth) can be calculated as follows:
Total Assets = Reserves ($50) + Government Bonds ($70) + Loans ($500) = $620
Total Liabilities = Deposits ($400)
Net Worth (Equity) = Total Assets - Total Liabilities = $620 - $400 = $220