Final answer:
After Montavon Winery's stock issuance, their current liabilities reduce to $1,000,000 with long-term liabilities unaffected. Acme Bank's balance sheet reflects increased reserves and loans with decreased bonds after the Fed's open market purchase. A hypothetical bank's net worth is calculated as $220 from the provided asset and liability figures.
Step-by-step explanation:
Montavon Winery's Current and Long-term Liabilities
After the issuance of 100,000 shares of common stock and the net proceeds of $2,000,000, Montavon Winery intended to use the funds to pay off its $3,000,000 of short-term debt. Assuming all proceeds are used for this purpose, Montavon's current liabilities would decrease by $2,000,000, leaving $1,000,000 of short-term debt remaining. If the company has no other long-term liabilities, then none would be reported in this scenario.
Acme Bank Balance Sheet Changes
When Acme Bank sells $10 million in Treasury bonds to the Fed, its reserves increase by $10 million, while the bonds asset decreases by $10 million. If Acme then uses these proceeds to make new loans, its loans would increase by $10 million. However, several conflicting versions of the Acme bank's initial balance sheet were presented. For consistency, let's proceed with the first option. Before the transaction, Acme Bank would have:
- Assets: Reserves $30 million, Bonds $50 million, Loans $50 million
- Liabilities: Deposits $300 million, Equity $30 million
After the open market purchase and issuing new loans:
- Assets: Reserves $40 million, Bonds $40 million, Loans $60 million
- Liabilities: Deposits $300 million, Equity $30 million
Note that deposits and equity remain unchanged while reserves and loans increase and bonds decrease.
\Bank's T-account Balance Sheet and Net Worth
Setting up a T-account for the bank with deposits of $400, reserves of $50, government bonds worth $70, and loans of $500:
- Assets: Reserves $50 + Bonds $70 + Loans $500 = $620
- Liabilities: Deposits $400
Net Worth (Equity) = Assets - Liabilities = $620 - $400 = $220
The bank's net worth is $220.