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 $210,000, $55,000, and $125,000, respectively. WLKT Partners contributed an additional $50,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $121,800 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 $517,337, $207,337 and $310,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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.

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.

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

Answer 1

Solution a;

Schedule of Divison of income
Particulars	WLKT Partners	Madison Senders	Observer Newspaper LLC	Total
Salary Allowance		$121,800.00		$121,800.00
Interest Allowance WLKT - ($210000*12%) Madison - ($55,000*12%) Observer - ($125,000*12%)	$25,200.00	$6,600.00	$15,000.00	$46,800.00
Remaining Income ($310,000 - $121,800 - $46,800 = $141,400) WLKT ($141,400*4/10) Madison ($141,400*3/10) Observer ($141,400*3/10)	$56,560.00	$42,420.00	$42,420.00	$141,400.00
Net Income	$81,760.00	$170,820.00	$57,420.00	$310,000.00

Solution b:

Journal Entries - Marvel Media LLC
Particulars	Debit	Credit
Divison of net income:
Income Summary Dr	$310,000.00
To WLKT Partners Capital's A/c		$81,760.00
To Madison Senders Capital's A/c		$170,820.00
To Observer Newspaper LLC Capital's A/c		$57,420.00
(Being Net income distributed among partners)
Withdrawl of Individual Member 's Equity:
WLKT Partners Capital's A/c Dr	$25,200.00
Madison Senders Capital's A/c Dr	$128,400.00
Observer Newspaper LLC Capital's A/c Dr	$15,000.00
To Cash A/c		$168,600.00
(Being salary and interest withdrawn by partners)

Solution c:

Marvel Medial LLC
Statement of Member's Equity
For year ended December 31' 20Y2
Particulars	WLKT Partners	Madison Senders	Observer Newspaper LLC	Total
Balances, Janauar 1, 20Y2	$210,000.00	$55,000.00	$125,000.00	$390,000.00
Add: Capital Additions	$50,000.00			$50,000.00
	$260,000.00	$55,000.00	$125,000.00	$440,000.00
Add: Net Income for the year	$81,760.00	$170,820.00	$57,420.00	$310,000.00
	$341,760.00	$225,820.00	$182,420.00	$750,000.00
Less: Member's Withdrawl	$25,200.00	$128,400.00	$15,000.00	$168,600.00
Balances, December'31 20Y2	$316,560.00	$97,420.00	$167,420.00	$581,400.00