Question

Ebony's bank balance first reached $400 on day 4, her balance = $400 on day 5, her balance = $0 on day 6, her balance = $400 on day 7, her balance = $0 on day 8, her balance = $400

Determine B (5) B (6), and B (7). Explain how you determined these amounts.

Answer 1

The T-account balance sheet for the bank includes reserves, government bonds, and loans as assets, and deposits as liabilities. The bank's net worth is calculated by subtracting the liabilities from the assets, resulting in a net worth of $220.

Step-by-step explanation:

Calculating the Bank's Balance Sheet and Net Worth

When setting up a T-account balance sheet for the bank, we need to list down the bank's assets and liabilities. The assets of the bank include reserves and loans made to customers, while the liabilities include deposits from customers. Here's how the T-account balance sheet looks:

• Assets:
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  • 
    
  • 
    
  • 
    
• Liabilities:
  • 
    
  • 
    

To calculate the net worth of the bank, subtract the liabilities from the assets:

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

Therefore, the bank's net worth is $220.