Applying the Interest Allowance Method, Compute Taylor and Timmy's Share

question 129

Multiple Choice

Applying the interest allowance method, compute Taylor and Timmy's share of net income if Taylor invested $370,000 and Timmy invested $780,000 at a 6% interest rate, for each partner with the remainder to be divided equally. Net income was $90,000.

• A) Taylor, $28,957; Timmy, $61,043
• B) Taylor, $45,000; Timmy, $45,000
• C) Taylor, $32,700; Timmy, $57,300
• D) None of these answers is correct.

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