Final answer:
Mont's net assets should be reported as $220 in the December 31, year 2 balance sheet, calculated by setting up a T-account balance sheet and subtracting total liabilities from the total assets.
Step-by-step explanation:
Calculating the Bank's Net Worth
To calculate Mont's net assets to be reported in the December 31, year 2 balance sheet, we will set up a T-account balance sheet and calculate the bank's net worth based on the provided information. The T-account balance sheet will list the assets and liabilities of the bank.
Assets
Liabilities
To find the net worth, also known as the bank's equity, we subtract the total liabilities from the total assets:
Total Assets = Reserves + Government Bonds + Loans = $50 + $70 + $500 = $620
Total Liabilities = Deposits = $400
Net Worth (Equity) = Total Assets - Total Liabilities = $620 - $400 = $220.
Hence, Mont's net assets should be reported as $220 in the December 31, year 2 balance sheet