Final answer:
A T-account for the bank shows assets of $620 and liabilities of $400, resulting in a net worth of $220. Assets include reserves, government bonds, and loans, whereas liabilities consist of deposits. The net worth is calculated by subtracting total liabilities from total assets.
Step-by-step explanation:
To answer the question regarding the setup of a T-account balance sheet for the bank and calculating its net worth, we'll need to organize the bank's assets and liabilities. A T-account is a visual representation of a company's accounts, depicting assets on one side and liabilities plus equity (net worth) on the other.
Assets:
Liabilities:
Net Worth Calculation:
To calculate the bank's net worth, we use the formula:
Net Worth = Total Assets - Total Liabilities
Total Assets = Reserves + Government Bonds + Loans = $50 + $70 + $500 = $620
Total Liabilities = Deponts = $400
Net Worth = $620 - $400 = $220
Thus, the bank's net worth is $220. This amount would be included on the liabilities side, to ensure the T-account balances, with total assets equalling liabilities plus net worth.