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 245,000, $60,000, and $145,000 respectively. WLKT Partners contributed an additional $60,000 to Marvel Media LLC on June 1, 20Y2. Madison Sanders received an annual salary allowance of $142,100 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 $648,965, $288,965 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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 lary 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.

Answer 1

Schedule of Division of Income
			WLKT	Madison	Observer	Total
Salary allowance				142100		142100
Interest allowance			29400	7200	17400	54000
Remaining income			65560	49170	49170	163900	(360000-142100-54000)
Net Income			94960	198470	66570	360000
Req b:
Journal entries
Accounts title and explanations				Debit $	Credit $
Income Summary account				360000
WLKT capital account					94960
Madison Capital account					198470
Observer capital account					66570
( for closing income summary account)
WLKT capital account				29400
Madison Capital account				149300
Observer capital account				17400
WLKT drawings account					29400
Madison drawings account					149300
Observer capital account					17400
Req c:
Statement of member equity:
			WLKT	Madison	Observer	Total
Capital balance on Jan 01			245000	60000	145000	450000
Capital additions			60000			60000
			305000	60000	145000	510000
Net Income for the year			94960	198470	66570	360000
			399960	258470	211570	870000
Member withdrawals			29400	149300	17400	196100
Balances Dec 31			370560	109170	194170	673900