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 $225,000, $55,000, and $135,000, respectively. WLKT Partners contributed an additional $60,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $130,500 during 2042. 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 2012 were $1,235,488, $855,488 and $380,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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

Answer 1

Solution a:

Schedule of Divison of income
Particulars	WLKT Partners	Madison Senders	Observer Newspaper LLC	Total
Salary Allowance		$1,30,500		$1,30,500
Interest Allowance	$33,750	$8,250	$20,250	$62,250
Remaining Income (380,000 - $130500 - $62250 = $187,250)	$74,900	$56,175	$56,175	$1,87,250
Net Income	$1,08,650	$1,94,925	$76,425	$3,80,000

Solution b:

Journal Entries - Marvel Media LLC
Particulars	Debit	Credit
Divison of net income:
Income Summary Dr	$3,80,000
To WLKT Partners, Members equity		$1,08,650
To Madison Senders Members equity		$1,94,925
To Observer Newspaper Members equity		$76,425
(Being Net income distributed among partners)
Withdrawl of Individual Member 's Equity:
WLKT Partners Member's Equity Dr	$33,750
Madison Senders Member's Equity Dr	$1,38,750
Observer Newspaper LLC Member's Equity Dr	$20,250
To Cash A/c		$1,92,750
(Being salary and interest withdrawn by partners)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	$2,25,000	$55,000	$1,35,000	$4,15,000
Add: Capital Additions	$60,000			$60,000
	$2,85,000	$55,000	$1,35,000	$4,75,000
Add: Net Income for the year	$1,08,650	$1,94,925	$76,425	$3,80,000
	$3,93,650	$2,49,925	$2,11,425	$8,55,000
Less: Member's Withdrawl	$33,750	$1,38,750	$20,250	$1,92,750
Balances, December'31 20Y2	$3,59,900	$1,11,175	$1,91,175	$6,62,250

Solution d:

Without an income sharing agreement, each member capital will be credited with an equal proportion of the total earnings or one third each. Separate contribution should be acknowledged in the income sharing formula.