Margaret has $3,200 cash after selling off her 52" flat screen television,Blu-Ray player,and laptop computer.She has debts of $4,800 owing to the following creditors: Anna
$900
Bob's Electronics
$1,500
Hyatt's Computing
$2,100
Jordan
$300
If they all agree to a composition agreement,how much will Hyatt's be able to collect?

Question

Quizplus · Accepted Answer

A composition agreement is a legal agreement made between a debtor and his/her creditors to settle debts at a reduced amount. In this case, Margaret owes a total of $4,800 to four creditors. If they all agree to a composition agreement, the creditors will receive a portion of the total debt based on their individual debt amounts. The total debt owed is $4,800 and Margaret only has $3,200 cash, so there is a shortfall of $1,600. To determine how much each creditor will receive, we need to divide the amount each creditor is owed by the total debt owed and then multiply that percentage by the amount of cash Margaret has. 
- Anna: $900/$4,800 = 18.75%, 18.75% x $3,200 = $600
- Bob's Electronics: $1,500/$4,800 = 31.25%, 31.25% x $3,200 = $1,000
- Hyatt's Computing: $2,100/$4,800 = 43.75%, 43.75% x $3,200 = $1,400
- Jordan: $300/$4,800 = 6.25%, 6.25% x $3,200 = $200
Therefore, the answer is B) $1,400.

Margaret Has $3,200 Cash After Selling Off Her 52" Flat