Question

Describe the following entry:

Debit Cash $4,000
Credit Accounts Receivable $4,000
- The company collected $4,000 from customers for a previous sale
- The company had cash sales of $4,000
- The company collected $4,000 from customers for a future sale
- The company received cash from its stockholders

Answer 1

A bank's T-account balance sheet has assets which include reserves, government bonds, and loans, and liabilities which include deposits. The net worth is determined by subtracting the liabilities from the assets, which in this case equals $220.

Step-by-step explanation:

Bank's T-account Balance Sheet

To set up a T-account balance sheet for the bank, we list its assets on one side and its liabilities on the other side. The bank's net worth is then calculated by subtracting its liabilities from its assets.

Assets

• Reserves: $50
• Government Bonds: $70
• Loans: $500

Liabilities

• Deposits: $400

Calculation of Net Worth

Net Worth = Total Assets - Total Liabilities = ($50 + $70 + $500) - $400 = $620 - $400 = $220.

The bank's net worth is $220 as calculated above.