Question

The following additional information is available. 1. Inventories are valued at lower-of-cost-or-market using LIFO. 2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is $52,279. 3. The short-term investments have a fair value of $26,910. 4. The notes receivable are due April 30, 2027, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2025.) 5.The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of $52,600 are pledged as collateral on a bank loan. 6. Licenses are recorded net of accumulated amortization of $12,940. 7.Treasury stock is recorded at cost.

Answer 1

To set up a T-account balance sheet for the bank, categorize the assets and liabilities. Calculate net worth by subtracting liabilities from assets.

Step-by-step explanation:

To set up a T-account balance sheet for the bank, we will categorize the bank's assets and liabilities. Assets include reserves, government bonds, and loans. Liabilities include deposits made by customers.

The bank's net worth can be calculated by subtracting the liabilities from the assets.

Assets:

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

Liabilities:

• Deposits: $400

Net Worth:

Net Worth = Assets - Liabilities

So:

Net Worth = ($50 + $70 + $500) - $400

Net Worth = $620 - $400

Net Worth = $220