Question

The general ledger of Blue Highway Cleaners at January 1, 2024, includes the following account balances:

Accounts Debits ($) Credits ($)
Cash 19,500
Accounts Receivable 7,900
Supplies 3,900
Equipment 14,500
Accumulated Depreciation 4,800
Salaries Payable 6,800
Common Stock 24,500
Retained Earnings 9,700
The following is a summary of the transactions for the year. For each transaction, determine the account(s) affected and the new balance (debit or credit) after the transaction:

March 12 - Provide services to customers, $59,000, of which $20,900 is on account.
May 2 - Collect on accounts receivable, $17,900.
June 30 - Issue shares of common stock in exchange for $5,000 cash.
August 1 - Pay salaries of $6,800 from 2023 (prior year).
September 25 - Pay repairs and maintenance expenses, $12,900.
October 19 - Purchase equipment for $7,900 cash.
December 30 - Pay $1,000 cash dividends to stockholders.
Adjusting entries:

A) Accrued salaries at year-end amounted to $19,500.
B) Depreciation for the year on the equipment is $4,900.
C) Office supplies remaining on hand at the end of the year equal $1,000.

Answer 1

A T-account balance sheet for the bank lists assets including reserves of $50, government bonds worth $70, and loans of $500. Liabilities are the deposits of $400. The bank's net worth is calculated as the difference between total assets ($620) and total liabilities ($400), resulting in a net worth of $220.

Step-by-step explanation:

To set up a T-account balance sheet for the bank, we list the assets on the left side and the liabilities and net worth (also known as equity) on the right side. The total of the assets should equal the total of the liabilities and net worth, according to the accounting equation: Assets = Liabilities + Net Worth.

Here's the T-account balance sheet for the bank:

Assets

• Cash (Reserves): $50
• Government Bonds: $70
• Loans: $500

Liabilities and Net Worth

• Deposits: $400
• Net Worth: (Calculated as the difference between total assets and total liabilities)

When we add up the assets:

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

Since the bank's deposits (liabilities) are $400, we calculate the net worth as:

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

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