Question

Your uncle repays a $450 loan from Tenth National Bank (TNB) by writing a $450 check from his TNB checking account. Assume these funds are the only loans and deposits available for your uncle and the bank. Complete the following T-accounts for your uncle and TNB before your uncle repays the loan. Your UncleAssets LiabilitiesTenth National BankAssets LiabilitiesComplete the following T-accounts for your uncle and TNB after your uncle repays the loan. Your UncleAssets LiabilitiesTenth National BankAssets LiabilitiesYour uncle’s wealth has changed.A. TrueB. False

Answer 1

Answer:

Uncle accounting:

         Cash              Note Payable        

DEBIT   CREDIT      DEBIT      CREDIT

             450             450

Bank Accounting

         Cash              Note Receivables

DEBIT   CREDIT      DEBIT      CREDIT

450                                              450

B.- False

Explanation:

The uncle will see a decrease in their assets (cash) and a decrease i ntheir liabilties(Note payable)

Therefore their net equity (wealth) will remain the same

The bank will record the collection from their client and decrease their receivables.