The following table lists various statistics for Bridger Bank.

-Refer to the table above.Which of the following changes would cause Bridger Bank's stockholder equity to be $120 million?

Question

The following table lists various statistics for Bridger Bank.
 
-Refer to the table above.Which of the following changes would cause Bridger Bank's stockholder equity to be $120 million?

Quizplus · Accepted Answer

The formula for calculating stockholder equity is: 
Stockholder equity = Total assets - Total liabilities

To make stockholder equity $120 million, we need to increase total assets or decrease total liabilities.

Option A involves increasing reserves by $45 million, which is an increase in total assets, and decreasing demand deposits by $15 million, which is a decrease in total liabilities.

Option B involves only increasing long-term debt and long-term investments, which do not directly affect total assets or liabilities.

Option C involves decreasing cash equivalents by $20 million, which is a decrease in total assets, and increasing short-term investments by $60 million, which is an increase in total assets, but does not affect total liabilities.

Option D involves increasing both short-term and long-term investments, which would increase total assets but would not affect total liabilities.

Therefore, only option A would cause Bridger Bank's stockholder equity to be $120 million.

The Following Table Lists Various Statistics for Bridger Bank