Question

Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $200,000, $40,000, and $160,000, respectively. WLKT Partners contributed an additional $50,000 to Marvel Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $55,000 during 20Y2. The members’ equity accounts are also credited with 10% 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 $1,260,000, $900,000, and $360,000, 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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 or enter zero.

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

Answer 1

Answer a.
Schedule of Division of Income
	WLKT Partners	Madison Sanders	Observer Newspaper, LLC	Total
Salary Allowance	-	55,000.00	-	55,000.00
Interest Allowance	20,000.00	4,000.00	16,000.00	40,000.00
Remaining Income (4:3:3)	106,000.00	79,500.00	79,500.00	265,000.00
Net Income	126,000.00	138,500.00	95,500.00	360,000.00

Answer b.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1	Income Summary	360,000.00
	WLKT Partners, Capital		126,000.00
	Madison Sanders, Capital		138,500.00
	Observer Newspaper, LLC, Capital		95,500.00
	(To record the close of net income)
2	WLKT Partners, Capital	20,000.00
	Madison Sanders, Capital	59,000.00
	Observer Newspaper, LLC, Capital	16,000.00
	WLKT Partners, Drawing		20,000.00
	Madison Sanders, Drawing		59,000.00
	Observer Newspaper, LLC, Drawing		16,000.00
	(To record the close of drawings accounts)

Answer c.
Marvel Media, LLC
Statement of Members' Equity
For the Years Ended Dec 31, 20Y2
	WLKT Partners	Madison Sanders	Observer Newspaper, LLC	Total
Balance, Jan 1, 20Y2	200,000.00	40,000.00	160,000.00	400,000.00
Capital Additions	50,000.00	-	-	50,000.00
Sub-total	250,000.00	40,000.00	160,000.00	450,000.00
Net Income for the Year	126,000.00	138,500.00	95,500.00	360,000.00
Sub-total	376,000.00	178,500.00	255,500.00	810,000.00
Members' Withdrawl	(20,000.00)	(59,000.00)	(16,000.00)	(95,000.00)
Balance, Dec 31, 20Y2	356,000.00	119,500.00	239,500.00	715,000.00