Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of capital balances.

Question

Jackson and Campbell have capital balances of $100,000 and $300,000, respectively. Jackson devotes full time and Campbell devotes one-half time to the business. Determine the division of $150,000 of net income in the ratio of capital balances.​

Quizplus · Accepted Answer

The ratio of capital balances is 1:3. Jackson devotes full time and Campbell devotes one-half time. Since Campbell is only devoting half of their time, their share of the income will be proportional to half of their capital balance. Thus, the total share of income will be 1/4 for Jackson (1/4 of $150,000 = $37,500) and 3/4 for Campbell (3/4 of $150,000 = $112,500), resulting in a division of $37,500 and $112,500. Thus, the correct choice is B.

Jackson and Campbell Have Capital Balances of $100,000 and $300,000