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?

Rationale

Jaunty Coffee Co.'s balance in long-term assets is $550 million.

To determine the long-term assets, we first calculate total assets minus short-term 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) YOUR ANSWER

This amount represents the value of short-term assets reported by Jaunty Coffee Co. and does not include any long-term assets. Since the question asks specifically for long-term assets, this choice is incorrect.

B ($250 million) YOUR ANSWER

This figure reflects the total liabilities of Jaunty Coffee Co. and does not pertain to the asset accounts. The balance in long-term assets is derived solely from the total asset value minus short-term assets, making this option incorrect as well.

C ($450 million) YOUR ANSWER

This choice may arise from a miscalculation, potentially subtracting the total liabilities from total assets. However, the proper calculation should focus on short-term assets, leading to a long-term assets balance of $550 million instead. Thus, this option is incorrect.

D ($550 million) CORRECT

This amount accurately represents Jaunty Coffee Co.'s long-term assets. By subtracting the short-term assets of $200 million from the total assets of $750 million, we arrive at the correct balance of long-term assets.

Conclusion

The calculation of long-term assets is essential for understanding Jaunty Coffee Co.'s financial structure. By subtracting the short-term assets from total assets, we confirm that the company has $550 million in long-term assets. This distinction helps in assessing the company's liquidity and long-term financial health.

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?

Jaunty Coffee Co.'s balance in long-term assets is $550 million.

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