Question

LLC Net Income and Statement of Members' Equity

Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $315,000, $80,000, and $190,000, respectively. WLKT Partners contributed an additional $80,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $182,700 during 20Y2. The members’ equity accounts are also credited with 12% interest on each member's January 1 capital balance. Any remaining income is to be shared in the ratio of 4:3:3 among the three members. The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $531,685, $61,685 and $470,000 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.

a. Determine the division of income among the three members. If an amount box does not require an entry, leave it blank.

Schedule of Division of Income
	WLKT Partners	Madison Sanders	Observer Newspaper, LLC	Total
Salary allowance		$		$
Interest allowance	$		$
Remaining income (4:3:3)
Net income	$	$	$	$

b. Prepare the journal entries to close the (1) net income and (2) withdrawals to the individual member equity accounts. For a compound entry, if an amount box does not require an entry, leave it blank.

(1)
(2)

c. Prepare a statement of members' equity for 20Y2. If an amount box does not require an entry, leave it blank.

Marvel Media, LLC
Statement of Members' Equity
For the Year Ended December 31, 20Y2
	WLKT Partners	Madison Sanders	Observer Newspaper, LLC	Total
Balances, January 1, 20Y2	$	$	$	$
Capital additions
	$	$	$	$
Net income for the year
	$	$	$	$
Member withdrawals
Balances, December 31, 20Y2	$	$	$	$

d What are the advantages of an income-sharing agreement for the members of this LLC?

Without an income-sharing agreement, each member   be credited with an equal proportion of the total earnings, or one-third each. Separate contributions   be acknowledged in the income-sharing formula.

Distribution of Cash Upon Liquidation

Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $24,000 and $16,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $30,000.

a. What is the amount of a gain or loss on realization?

Loss

$

b. How should the gain or loss be divided between Hewitt and Patel?

Hewitt
Patel

c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0".

Hewitt and Patel
Distribution of Cash
	Hewitt	Patel
Capital balances before realization	$	$
Division of gain or loss on realization
Balances	$	$
Cash distributed to partners
Final balances	$	$

Answer 1

Answer A :- Schedule of division of income

Particular. WLKT. Madison. Observer Total

Partners. Senders. Newspaper

LLC

Salary.

Allowances - $182700. - $182700

Interest Allowances:-

WLKT $56700

(315000×18%)

Madison senders

(80000×18%). $14400

Observer newspaper LLC

(190000×18%). $34200. $105300

Remaining Income (470000-182700-105300)

=$182000

WLKT. $72800

( 182000×4/10.)

Madison senders

(182000×3/10). $54600

Observer newsletter LLC

(182000×3/10). $54600. $182000

Net Income $129500 $251700 $88800 $470000

Answer b:- journal entry Marvel media llc

Particular. Debit. Credit

1. Division of Net income :-

Income summary Dr. $470000

To WLKT partners Capital A/C. $129500

To Madison Senders Capital A/C. $251700

To observer newspaper llc capital A/C $ 88800

(Being Net Income distributed among partners)

2. Withdrawal of individual Members equity:-

WLKT partners capital a/c. $56700

Madison senders capital a/C. $197100

Observer newspaper llc $34200

Capital a/c

To Cash A/C. $288000

(Being salary and interest withdrawn by partners)

Answer C:- Marvel Media LLC

Statement of members equity

For year ended December 31'20Y2

Particulars. WLKT Madison observer Total

Partners. Senders. Newspaper LLC

Balances. $315000 $80000. $190000. $585000

January 1

(+) Capital

Additions. $80000. - - $80000

$395000 $80000 $190000. $665000

(+)Net Income

:- $129500 $251700. $88800 .$470000

$524500. $331700. $278800 $1135000

(-) Members withdrawl

$56700. $197100. $34200. $288000

Balances December

31 20Y2. $467800. $134600 $244600 $847000

Answer d:-