Solution a:
Schedule of division of net income | |||
Particulars | Farley | Clark | Total |
Salary allowance | $69,000.00 | $55,000.00 | $124,000.00 |
Remaining income | $9,000.00 | $15,000.00 | $24,000.00 |
Net Income | $78,000.00 | $70,000.00 | $148,000.00 |
Solution b:
Journal Entries | |||
Event | Particulars | Debit | Credit |
1 | Revenue Dr | $668,000.00 | |
To Expenses | $520,000.00 | ||
To Martin Farley, Member Equity | $78,000.00 | ||
To Ashley Clark, Member Equity | $70,000.00 | ||
(To close revenue and expenses) | |||
2 | Martin Farley, Member Equity Dr | $69,000.00 | |
Ashley Clark, Member Equity Dr | $55,000.00 | ||
To Martin Farley, Drawing | $69,000.00 | ||
To Ashley Clark, Drawing | $55,000.00 | ||
(To close drawing account) |
Solution c:
If the net income of the LLC were less than the sum of salary allowance, both members would still be credited with their salary allowances. The difference between the net income and total salary allowances would be allocated to each partner as deduction according to the income sharing ratio.
Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating...
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pleasw note the ratio is 3:1. thanks
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