Question

Comparative Balance Sheet

Ending Balance Beginning Balance
Assets:
Cash and cash equivalents $ 34 $ 29
Accounts receivable 32 36
Inventory 53 66
Property, plant, and equipment 554 480
Less accumulated depreciation 208 206
Total assets $ 465 $ 405
Liabilities and stockholders' equity:
Accounts payable $ 41 $ 50
Accrued liabilities 17 16
Income taxes payable 28 30
Bonds payable 217 200
Common stock 75 70
Retained earnings 87 39
Total liabilities and stockholders' equity $ 465 $ 405


Net income for the year was $60. Cash dividends were $12. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows.



The net cash provided by (used in) financing activities for the year was:

Answer 1

To calculate the bank's net worth using a T-account balance sheet, we list assets (reserves, government bonds, loans) on one side and liabilities (deposits) on the other, then subtract liabilities from assets to determine the bank capital, which equals $220.

To create a T-account balance sheet for a bank with the given amounts, we list the bank's assets on one side and its liabilities and equity on the other side. The bank's net worth can be calculated as the difference between the total assets and total liabilities.

The T-account balance sheet would look like this:

AssetsLiabilities + Equity

Reserves: $50

Bonds: $70

Loans: $500

Deposits: $400

Equity (Net Worth): $220

Calculating the bank's net worth, we subtract the liabilities from the assets:

Total Assets = Reserves + Bonds + Loans = $50 + $70 + $500 = $620

Total Liabilities = Deposits = $400

Bank's Net Worth = Total Assets - Total Liabilities = $620 - $400 = $220

Thus, the bank's net worth, also known as bank capital, is $220.