Question

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 members. The r esponse and come for More Media, LLC for 20 0 8,412.5256.412 and .000 espective to the .. Determine the division of income on the three members. If an amount box does not require an entry leave it bank WUKT Parts anders , LLC

Answer 1

31 a. Determine the division of income among the three members. Total 150,800 72,000 217,200 440,000 Schedule of Division of Income WLKT Partners Madison Sanders Observer Newspaper, LLC Salary allowance 150,800 Interest allowance 39,000 9,750 23,250 Remaining income (440000-150800-72000)in(4:3:3) 86,880 65,160 65,160 Net income 125,880 225,710 88,410 39 b. Prepare the journal entries to close the (1) net income and (2) withdrawals to the individual member equity accounts 41 Account title & explanation Debit Credit Revenues 806,412 Expenses 366,412 WLKT Partners ,Member Equity 125,880 Madison Sanders, Member Equity 225,710 Observer Newspaper, LLC, Member Equity 88,410 39,000 160,550 23,250 WLKT Partners, Member Equity Madison Sanders, Member Equity Observer Newspaper, LLC, Member Equity WLKT Partners, Drawings Madison Sanders, Drawings Observer Newspaper, LLC,Drawings 39,000 160,550 23,250

56 c. Prepare a statement of members' equity for 20Y2. Balances, January 1, 20Y2 Capital additions Marvel Media, LLC Statement of Members' Equity For the Year Ended December 31, 20Y2 WLKT Partners Madison Sanders Observer Newspaper, LLC 260,000 65,000 155,000 70,000 330,000 65,000 155,000 125,880 225,710 88,410 455,880 290,710 243,410 39,000 160,550 23,250 416,880 130,160 220,160 Total 480,000 70,000 550,000 440,000 990,000 222,800 767,200 Net income for the year Member withdrawals Balances, December 31, 20Y2 What ae the advantages of an income sharing agreement for the members of this LLC? Without an income sharing agreement each member would be credited with an equal proportion of the total earnings, or one third each. Seprate contribution can be acknowledged in the income sharing formula.