Question

LLC Net Income and Statement of Members' Equity Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and observer Newspaper, U.C. On January 1, 202, the three members had equity of $150,000, $40,000, and $90,000, respectively. WLKT Partners contributed an additional $40,000 to Marvel, Media, LLC, on June 1, 2012. Madison Sanders received an annual salary allowance of $87,000 during 2072. 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 2072 were $797,554, $537,554 and $260,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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		$87,000.00		$87,000.00
Interest Allowance WLKT - ($250,000*18%) Madison - ($65,000*18%) Observer - ($150,000*18%)	$22,500.00	$6,000.00	$13,500.00	$42,000.00
Remaining Income (260,000 - $87,000 - $42,000 = $131,000)	$52,400.00	$39,300.00	$39,300.00	$1,31,000.00
Net Income	$74,900.00	$1,32,300.00	$52,800.00	$2,60,000.00

Solution b:
Journal Entries - Marvel Media LLC
Particulars	Debit	Credit
Divison of net income:
Revenue Dr	$7,97,554.00
To Expenses		$5,37,554.00
To WLKT Partners, Members equity		$74,900.00
To Madison Senders Members equity		$1,32,300.00
To Observer Newspaper Members equity		$52,800.00
(Being Net income distributed among partners)
Withdrawl of Individual Member 's Equity:
WLKT Partners Member's Equity Dr	$22,500.00
Madison Senders Member's Equity Dr	$93,000.00
Observer Newspaper LLC Member's Equity Dr	$13,500.00
To WLKT Partners, Drawing		$22,500.00
To Madison Senders Drawing		$93,000.00
To Observer Newspaper Drawing		$13,500.00
(Being drawing account closed)

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	$1,50,000.00	$40,000.00	$90,000.00	$2,80,000.00
Add: Capital Additions	$40,000.00			$40,000.00
	$1,90,000.00	$40,000.00	$90,000.00	$3,20,000.00
Add: Net Income for the year	$74,900.00	$1,32,300.00	$52,800.00	$2,60,000.00
	$2,64,900.00	$1,72,300.00	$1,42,800.00	$5,80,000.00
Less: Member's Withdrawl	$22,500.00	$93,000.00	$13,500.00	$1,29,000.00
Balances, December'31 20Y2	$2,42,400.00	$79,300.00	$1,29,300.00	$4,51,000.00

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.