Question

Balance Sheet Jay Pembroke started a business in April. Prepare a Balance Sheet using the following balances for April transactions. Cash $12,950 Accounts Receivable 2,000 Office Supplies 4,600 Prepaid Insurance 1,200 Accounts Payable $300 Jay Pembroke, Capital 18,000 Jay Pembroke, Drawing 100 Service Fees 3,300 Rent Expense 750 You will need to calculate the ending balance of the Capital account.

Answer 1

To determine the bank's net worth, a T-account balance sheet is created with assets, including reserves, government bonds, and loans, and liabilities consisting of deposits. The bank's net worth is calculated as the difference between total assets of $620 and total liabilities of $400, which equals $220.

Step-by-step explanation:

Understanding the Balance Sheet of a Bank:

To set up a T-account balance sheet for the bank in question, we need to list its assets and liabilities to determine the bank's net worth. The assets of the bank include reserves, government bonds, and loans made, while the liabilities consist of the deposits from customers. The net worth, also referred to as the bank's equity, is calculated by subtracting the liabilities from the assets.

Assets:

Reserves: $50

Government Bonds: $70

Loans: $500

Liabilities:

Deposits: $400

The total assets amount to $620 ($50 in reserves + $70 in government bonds + $500 in loans). The total liabilities are $400 in deposits. Subtracting the total liabilities from the total assets, we calculate the net worth as follows: $620 - $400 = $220. Therefore, the bank's net worth is $220.

Answer 2

Jay Pembroke Company

Balance Sheet as of April 30

Assets:

Cash $12,950

Accounts Receivable 2,000

Office Supplies 4,600

Prepaid Insurance 1,200

Total assets $20,750

Liabilities:

Accounts Payable $300

Jay Pembroke, Capital 20,450

Total liabilities + equity $20,750

Step-by-step explanation:

a) Data and Calculations:

Assets:

Cash $12,950

Accounts Receivable 2,000

Office Supplies 4,600

Prepaid Insurance 1,200

Liabilities:

Accounts Payable $300

Statement of Owner's Equity:

Jay Pembroke, Capital 18,000

Net income 2,550

Jay Pembroke, Drawing (100)

Ending Capital 20,450

Income Statement for the month ended April 30

Service Fees 3,300

Rent Expense 750

Net income 2,550