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, $24,000 Dr.; King, $88,000 Cr.; and Tanaka, $64,000 Cr.
If Nettles is personally bankrupt and unable to pay any of the $24,000, 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 | $ | $ | $ |
2.
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 $300,000, $75,000, and $180,000, respectively. WLKT Partners contributed an additional $80,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $174,000 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 $1,107,960, $597,960 and $510,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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.
1.
Amount of Cash Received | |||
Nettles | King | Tanaka | |
Capital balances after realization | $24,000 Dr. | $88,000 Cr. | $64,000 Cr. |
Distribution of partner deficiency | - 24,000 | - 16,000 | - 8,000 |
Capital balances after deficiency distribution | 0 | $72,000 Cr. | $56,000 Cr. |
Deficiency of $24,000 will be borne by King and Tanaka in their profit sharing ratio of 2:1 i.e. by $16,000 by King and $8,000 by Tanaka
Hence, King will receive $72,000 and Tanaka will receive $56,000.
Note: I have answered question 1 as per HOMEWORKLIB POLICY. You please post your other question separately. Thanks
Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubts. Thanks.
Liquidating Partnerships—Capital Deficiency Nettles, King, and Tanaka are partners sharing income 3:2:1. After the firm's loss...
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, $24,000 Dr.; King, $87,000 Cr.; and Tanaka, $65,000 Cr. If Nettles is personally bankrupt and unable to pay any of the $24,000, 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...
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, $158,000 Cr.; and Tanaka, $114,000 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...
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, $54,000 Dr.; King, $197,000 Cr.; and Tanaka, $144,000 Cr. If Nettles is personally bankrupt and unable to pay any of the $54,000, 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...
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, $30,000 Dr.; King, $113,000 Cr.; and Tanaka, $79,000 Cr. If Nettles is personally bankrupt and unable to pay any of the $30,000, 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...
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 $180,000, $45,000, and $110,000, respectively. WLKT Partners contributed an additional $50,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $104,400 during 20Y2. The members’ equity accounts are also credited with 18% interest on each member's January 1 capital balance. Any...
Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $165,000, $40,000, and $100,000, respectively. WLKT Partners contributed an additional $40,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $95,700 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...
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, $66,000 Dr.; King, $249,000 Cr.; and Tanaka, $166,000 Cr. If Nettles is personally bankrupt and unable to pay any of the $66,000, 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.
LLC het Income and statement of Members' Marvel Media, LLC has three members WUKT Partners, Madison Sanders, and observer News , LLC. on January 1, 2012, the three members had equity of $200.000 165.000 and $155.000, ectively. WUKT Partners contributed 000 to Marvel Media Co ne 2012 Madison Sanders received an annual salary wowance of $150.00 during 2012. The members' y we created 15 to each member's balance income is to be shared in the nati o n the three...
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...
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, 202, the three members had equity of $230,000, $60,000, and $140,000, respectively. WLKT Partners contributed an additional $60,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $133,400 during 2042. The members' equity accounts are also credited with 15% interest on each member's January 1 capital balance. Any...