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 $200,000, $50,000, and $120,000, respectively. WLKT Partners contributed an additional $50,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $116,000 during 20Y2. The members' equity accounts are also credited with 15% 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 $733,442, $393,442 and $340,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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)

Answer 1

solution a) The division of income among the three members is shown below. WLRT Madison observer. Total partners anders Newspaper, LLC Salary Allowance . $116,000 $116,000 Interest Allowance $30,000 $ 7,500 $181050 $ 55,500 Remaining Income $67,000 $50,550 $50,550 $162,500 . (shared w: 3:3) Net Income ... $97,400 $174.050 $68,550 $340,00 Explanation D Interest Allowance : 15% of January 1, Capital .. w2Kt Partners = $200,000 x 156.. => $30,000 . Madison Sanders = $ 50.000 4151 => $ 7,500 Observer News paper ilds - $ 120,000 * 151. => $ 18,000

2) Remalling Income :- $340,000-$116,000 - $55,500 = $ 168,500 WIKT Partners = $168,500 4 ho => $67,400 Madison Sanders = $168,500 + B => $ 50,550 Observer Newspaper, Le = $168,500 x => $ 50,550

b) Journal Entries Credit (1) Date Dec 31 2012 Deblelt $340,000 Account Title and Explanation Net Income WILT partners Madison sanders : Observer Newspaper, LLC.. (to record net income to the individuail member C. Buity accounts $97,400 $174,050 $ 68,550 Dec 31 WLKT Partners, member eroulty $ 30.000 2082 Madison Sanders, membey equity $123,500 observer New paper, LLC member equity $ 181000 WLKT Partners, drawings $ 30,000 Madison Sanders, drawings $123,500 Observey newspaper, lilc DyqW 1135 $ 18,000 (to recory withdrawals to the individual member equity accounts) Note : Drawings a salary Allowance & Interest Allowance. .

MARVEL , MEDIA, LLC Statement of Member's Equity For the year ended December 31, 2012 WLKT Madison Observer Total partners Sanders Newspaper, Lle Members Coulty ason $ 200,000 $50,000 $1201.000 $370,000 : January 1, 2002 Additional contributions $ 50.000 $ 50,000 $250,000 $50,000 $120,000 $420,000 Net Income . $ 97,400 $1741950 $ 68,550 $340,000! ... $347, 400 $224,050. $188,550 $780,000 Member's withdrawals ($ 30,000) ($123,500) (18.000) ($ 171,500) $100,550 $317,400 $170,550 $900. Members equity as of December 31, 20 Y2 1.
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