Applying the Interest Allowance Method,compute Taylor and Timmy's Share of Net

question 124

Multiple Choice

Applying the interest allowance method,compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000 at a 6% interest rate,with the remainder to be divided equally.Net income was $75,000.

• A)Taylor,$15,000; Timmy,$60,000
• B)Taylor,$37,500; Timmy,$37,500
• C)Taylor,$19,500; Timmy,$55,500
• D)None of these answers is correct.

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