Answer:
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.
