K2 corporation has assets of $2,400,000, common stock of $624,000, and retained earnings of $380,000. what are the creditors' claims on their assets?

Given:

Assets = $2,400,000

Common stock = $624,000

Retained earnings = $380,000

To calculate: Creditors' claim on assets

Solution:

Claim on assets = This includes liabilities and owners' equity.

Creditors' claim on assets = Assets-Liabilities

Liabilities in this case is common stock ($624,000) and retained earnings ($380,000).

Now, putting values in the formula,

Creditor's claim on assets = $2,400,000 - $624,000 - $380,000 = $1,396,000

So, creditors' claim on assets of K2 corporation = $1,396,000