Question

Following are selected balance sheet accounts for Third State Bank: vault cash = $2 million, U.S. government securities = $5 million, demand deposits = $13 million, non -transactional accounts = $20 million, cash items in process of collection = $4 million, loans to individuals = $7 million, loans secured by real estate = $9 million, federal funds purchased = $4 million, and bank premises = $11 million.

(a)From these accounts, select only the asset accounts and calculate the bank’s total assets.
(b)Calculate the total liabilities for Third State Bank.
(c)Based on the totals for assets and liabilities, determine the amount in the stockholders’ equity account.

Answer 1

The bank's total assets are $70 million, total liabilities are $33 million and the stockholders' equity is $37 million.

Step-by-step explanation:

To determine the bank's total assets, we need to select the asset accounts from the given information. The asset accounts include vault cash, U.S. government securities, demand deposits, non-transactional accounts, cash items in process of collection, loans to individuals, loans secured by real estate, federal funds purchased, and bank premises. Adding up the values of these accounts, we get a total asset of $70 million.

To calculate the total liabilities for Third State Bank, we need to consider all liabilities accounts, which in this case are demand deposits and non-transactional accounts. Adding up the values of these accounts, we get a total liability of $33 million. to determine the stockholders' equity, we subtract the total liabilities from the total assets. Therefore, the stockholders' equity is $37 million.