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

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.