Final answer:
A family with $70,000 in assets and $22,000 in liabilities has a net worth of $48,000. For the bank scenario, after setting up the T-account showing assets and liabilities, the bank's net worth is calculated to be $220, which is the difference between total assets of $620 and total liabilities of $400. Option c is the answer.
Step-by-step explanation:
The calculation of a family's or a bank's net worth involves subtracting its total liabilities from its total assets. In the student's question, the family's net worth would be calculated as $70,000 (total assets) minus $22,000 (total liabilities), resulting in a net worth of $48,000.
In the context of the bank example provided, to set up a T-account balance sheet and calculate the net worth, we would list the bank's assets and liabilities. The assets include reserves of $50, government bonds worth $70, and loans made totaling $500. The liabilities include deposits totaling $400. To calculate the bank's net worth, the total assets are summed and then the total liabilities are subtracted from this amount.
Bank T-Account Balance Sheet
Assets:
Reserves: $50
Government Bonds: $70
Loans: $500
Total Assets: $620
Liabilities:
Deposits: $400
Total Liabilities: $400
Net Worth: Total Assets - Total Liabilities = $620 - $400 = $220
Thus, the bank's net worth is $220. It is important for a bank to maintain a positive net worth to continue operations smoothly and to reassure depositors.