Applying the profit and loss ratio method,compute Taylor and Timmy's share of net income if Taylor invested $200,000 and Timmy invested $800,000 and the profit and loss ratio is 3:2.Net income was $75,000.
A)Taylor,$15,000;Timmy,$60,000
B)Taylor,$37,500;Timmy,$37,500
C)Taylor,$45,000;Timmy,$30,000
D)None of these answers is correct.

Question

Quizplus · Accepted Answer

First, we need to find the total investment:

Total investment = $200,000 + $800,000 = $1,000,000

Next, we need to find the profit and loss ratio:

Taylor's ratio = 3/5
Timmy's ratio = 2/5

To apply the profit and loss ratio method, we need to multiply the net income by each ratio to get each person's share:

Taylor's share = $75,000 x 3/5 = $45,000
Timmy's share = $75,000 x 2/5 = $30,000

So, Taylor's share of net income is $45,000 and Timmy's share of net income is $30,000. Therefore, the best choice is C.

Applying the Profit and Loss Ratio Method,compute Taylor and Timmy's