Question

Included in the December 31 trial balance of Rivera Company are the following assets.

Cash $190,000 Work in process $200,000
Equipment (net) 1,100,000 Receivables (net) 400,000
Prepaid insurance 41,000 Patents 110,000
Raw materials 335,000 Finished goods 170,000

Answer 1

To set up a T-account balance sheet for the given bank, reserves, government bonds, and loans comprise the assets, while deposits represent the liabilities. The net worth or equity is the difference between total assets and liabilities, which is $220 for this bank's balance sheet.

Step-by-step explanation:

A T-account balance sheet displays a bank's assets on one side and liabilities and equity on the other. To illustrate using the given data:

• Assets include:
• Liabilities include deposits totaling $400.

The net worth, also known as equity, is calculated by subtracting the total liabilities from the total assets. Given that the total assets equal $620 ($50 in reserves + $70 in bonds + $500 in loans) and the total liabilities are $400, the net worth is $220 ($620 - $400).

Here's a summary of the T-account:

AssetsLiabilities + EquityReserves: $50Deposits: $400Bonds: $70Net Worth: $220Loans: $500Total: $620Total: $620