1. LLC Net Income and Statement of Members' Equity Marvel Media, LLC, has three members: WLKT...

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 $260,000, $65,000, and $155,000, respectively. WLKT Partners contributed an additional $70,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $150,800 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 $627,161, $247,161 and $380,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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 $42,000 and $28,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $53,000.

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

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	$	$

Liquidating Partnerships—Capital Deficiency

Nettles, King, and Tanaka are partners sharing income 3:2:1. After the firm's loss from liquidation is distributed, the capital account balances were: Nettles, $42,000 Dr.; King, $159,000 Cr.; and Tanaka, $115,000 Cr.

If Nettles is personally bankrupt and unable to pay any of the $42,000, what will be the amount of cash received by King and Tanaka upon liquidation? If an amount is zero, enter in 0. Use the minus sign to indicate any deficiencies.


Amount of Cash Received

	Nettles	King	Tanaka
Capital balances after realization	$	$	$
Distribution of partner deficiency
Capital balances after deficiency distribution	$	$	$

Statement of Partnership Liquidation

After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $45,000, $63,900, and $28,500, respectively. Cash, noncash assets, and liabilities total $66,600, $118,500, and $47,700, respectively. Between July 1 and July 29, the noncash assets are sold for $94,500, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1.

Prepare a statement of partnership liquidation for the period July 1-29. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter in "0".

Gold, Porter, and Sims
Statement of Partnership Liquidation
For the Period Ending July 1-29
	Cash +	Noncash Assets =	Liabilities +	Capital Gold (3/6) +	Capital Porter (2/6) +	Capital Sims (1/6)
Balances before realization	$	$	$	$	$	$
Sale of assets and division of loss	+
Balances after realization	$	$	$	$	$	$
Payment of liabilities
Balances after payment of liabilities	$	$	$	$	$	$
Cash distributed to partners
Final balances	$	$	$	$	$	$

Solutions

Expert Solution

A.		Allocation of partnership income
					WLKT	Madison	Observer	Total
	Net income							380000
	Salary allowances					150800		150800
	Balance of income							229200
	Interest allowances				31200	7800	18600	57600
	(Jan 1 capital balance*12%)				(260000*12%)	(65000*12%)	(155000*12%)
	Balance of income							171600
	Balance allocated at 4:3:3				68640	51480	51480	171600
					(171600*4/10)	(171600*3/10)	(171600*3/10)
	Balance of income							0
	Share of the partners				99840	210080	70080	380000

B.	Date	Account titles				Debit	Credit
	Dec 31.	Income summary				380000
		WLKT partners,Member equity					99840
		Madison sanders,Member equity					210080
		Observer newspaper,LLC,Member equity					70080
		(To close net income)
	Dec 31.	WLKT partners,Member equity				31200
		Madison sanders,Member equity				158600
		Observer newspaper,LLC,Member equity				18600
		WLKT partners,Drawing			(0+31200)		31200
		Madison sanders,Drawing			(150800+7800)		158600
		Observer newspaper,LLC,Drawing			(0+18600)		18600
		(Drawings=Salary allowance+Interest allowance)
		(To close withdrawals)

C.			Statement of member's equity:
					WLKT	Madison	Observer	Total
	Balance as on Jan 1.				260000	65000	155000	480000
	Capital additions				70000	0	0	70000
					330000	65000	155000	550000
	Net income for the year				99840	210080	70080	380000
					429840	275080	225080	930000
	Member withdrawals			ekkarill92 answered 1 year ago Next > < Previous Related Solutions LLC Net Income and Statement of Members' Equity Marvel Media, LLC, has three members: WLKT Partners,... 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 $175,000, $45,000, and $105,000, respectively. WLKT Partners contributed an additional $40,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $101,500 during 20Y2. The members’ equity accounts are also credited with 12% interest on each member's January 1 capital balance. Any... LLC Net Income and Statement of Members' Equity Marvel Media, LLC, has three members: WLKT Partners,... LLC Net Income and Statement of Members' Equity Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. 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1. LLC Net Income and Statement of Members' Equity Marvel Media, LLC, has three members: WLKT...

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