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 $70,000.
A) Taylor, $14,000; Timmy, $56,000
B) Taylor, $35,000; Timmy, $35,000
C) Taylor, $42,000; Timmy, $28,000
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

The profit and loss ratio is 3:2, so Taylor's share is (3/5) of $70,000, which is $42,000, and Timmy's share is (2/5) of $70,000, which is $28,000.

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