asked 67.9k views
5 votes
In 2024, moon walk had the following additional transactions: sold equipment for $25,000 cash

purchased a vehicle for $32,000 cash
issued bonds payable in exchange for $1,500,000 cash
paid a cash dividend of $100,000
answer the following questions related to preparing moon walk's statement of cash flows for december 31, 2024.
What is Net Income?____

2 Answers

2 votes

Final answer:

The bank's net worth is calculated by subtracting its total liabilities ($400 in deposits) from its total assets ($50 in reserves, $70 in government bonds, and $500 in loans), resulting in a net worth of $220.

Step-by-step explanation:

To calculate the net worth of the bank using the provided figures, we should set up a T-account balance sheet, with assets on one side and liabilities and equity on the other. Here's how it would look:

Bank's T-Account Balance Sheet:

Assets:

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

Liabilities:

  • Deposits: $400

To find the bank's net worth, also known as equity, we subtract the total liabilities from the total assets.

Total Assets = Reserves + Government Bonds + Loans
= $50 + $70 + $500
= $620

Total Liabilities = Deposits
= $400

Net Worth = Total Assets - Total Liabilities
= $620 - $400
= $220

Therefore, the bank's net worth is $220.

answered
User Soger
by
8.3k points
5 votes

Final answer:

Net Income cannot be determined solely from the given transactions related to a statement of cash flows. However, the bank's net worth, in a separate T-account balance sheet example, is calculated as the difference between assets and liabilities, resulting in a net worth of $220.

Step-by-step explanation:

The subject question concerns preparing a statement of cash flows and determining the Net Income. However, the provided transactions do not directly yield Net Income as it typically comes from the income statement, which aggregates revenue and expenses over a period. To calculate net income for the company, you would need to know all the revenues and expenses for the period, not just the cash transactions. The transactions given (selling equipment, purchasing a vehicle, issuing bonds, paying dividends) are part of cash flows but they don't provide complete information to calculate net income.

In a T-account balance sheet scenario for a bank, which is presented as a separate example, the net worth (or equity) of the bank is calculated by balancing assets against liabilities. For the bank with deposits of $400 (liability), reserves of $50, government bonds worth $70, and loans of $500 (all assets), the net worth would be the difference between total assets and total liabilities.

The T-account balance sheet for the bank would look like this:

  • Assets
  • Cash Reserves: $50
  • Government Bonds: $70
  • Loans: $500
  • Total Assets: $620
  • Liabilities
  • Deposits: $400
  • Total Liabilities: $400

To calculate the bank's net worth:

Total Assets - Total Liabilities = Net Worth

$620 - $400 = $220

Therefore, the bank's net worth is $220.

answered
User Chanlito
by
8.1k points
Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.