64. Jaunty Coffee Co.’s balance sheet shows $750 million in its asset account and $250 million in its liabilities account. Jaunty Coffee Co. reports short-term assets of $200 million. What is Jaunty Coffee’s balance in long-term assets?
Answer: D
Jaunty Coffee Co.’s balance in long-term assets is $550 million.
To determine Jaunty Coffee Co.'s balance in long-term assets, we subtract the short-term assets from the total assets. With total assets of $750 million and short-term assets of $200 million, the long-term assets amount to $550 million.
A) $200 million
This option represents the amount of short-term assets reported by Jaunty Coffee Co. It does not account for the long-term assets, which are calculated by subtracting short-term assets from total assets. Therefore, this option is incorrect.
B) $250 million
While this amount represents Jaunty Coffee Co.'s liabilities, it does not pertain to the calculation of long-term assets. The question specifically inquires about long-term assets, making this option irrelevant and incorrect.
C) $450 million
This option does not accurately reflect the calculation of long-term assets. Long-term assets are determined by subtracting short-term assets from total assets, which would yield a balance of $550 million, not $450 million. Hence, this option is incorrect.
D) $550 million
This is the correct answer as it accurately represents the balance of long-term assets. By subtracting the short-term assets of $200 million from the total assets of $750 million, we find that the long-term assets are indeed $550 million.
Conclusion
The correct answer is $550 million, which is derived from the proper calculation of total assets minus short-term assets. Options A, B, and C do not provide valid long-term asset figures, demonstrating a misunderstanding of the balance sheet components. Therefore, D is the only correct choice based on the provided information.