Question

The P. Woodsley, Capital account balance:

A. increased $1,000 during the month of May.
B. has a $5,265.82 debit balance.
C. has a $4,256.82 credit balance.
D. didn’t change during the month of May and has a $5,256.82 credit balance.

Answer 1

The T-account balance sheet for a bank with $400 in deposits, $50 in reserves, $70 in government bonds, and $500 in loans, shows a total of $620 in assets. With liabilities of $400, the bank's net worth, which is equivalent to The P. Woodsley, Capital account balance, is calculated to be $220.

Step-by-step explanation:

To address the scenario where a bank has deposits of $400, reserves of $50, government bonds worth $70, and has made loans of $500, we would set up a T-account to represent the bank's balance sheet. The net worth, or equity, of the bank can be calculated by subtracting the total liabilities from the total assets.

The P. Woodsley, Capital account balance:

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

• Deposits: $400

Assets total = Reserves + Loans + Government Bonds = $50 + $500 + $70 = $620

Liabilities total = Deposits = $400

Net Worth = Assets - Liabilities = $620 - $400 = $220

The bank's net worth, which is the same as the capital account balance for The P. Woodsley, is $220.