Nash's Trading Post, LLC has assets of $4200000, common stock of $1000000, and retained earnings of $600000. What are the creditors' claims on their assets?

Question

Business

Demetrius Taylor

26 December, 07:09

Nash's Trading Post, LLC has assets of $4200000, common stock of $1000000, and retained earnings of $600000. What are the creditors' claims on their assets?

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Answers (1)

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Desiree Howard · Answer 1

The correct answer is $2,600,000.

Explanation:

According to the scenario, the given data are as follows:

Total Assets = $4,200,000

Common stock = $1,000,000

Retained earnings = $600,000

So, we can calculate the creditors' claims on their assets by using following formula:

Creditor's Claim on their Assets = Total Assets - (Common stock + Retained earnings)

= $4,200,000 - ($1,000,000 + $600,000)

= $4,200,000 - $1,600,000

= $2,600,000

Hence, Creditors' claims on their assets will be $2,600,000.