Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in a

Question

Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $40,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $154,000 and $208,000, respectively.

a. Provide the journal entry for the asset revaluation. For a compound transaction, if an amount box does not require an entry, leave it blank.

b. Provide the journal entry for the bonus under the following independent situations:

1. Lin purchased a 30% interest in Alert Medical, LLC, for $228,000. For a compound transaction, if an amount box does not require an entry, leave it blank.

2. Lin purchased a 25% interest in Alert Medical, LLC, for $124,000. For a compound transaction, if an amount box does not require an entry, leave it blank.

Medical Equipment Abrams, Member Equity Lipscomb, Member Equity

Explanation / Answer

Explanation:

Date General Journal Debit Credit a Medical Equipment 40000 Abrams, Member Equity
40000/5*2 16000 Lipscomb, Member Equity
40000/5*3 24000 b 1 Cash 228000 Abrams, Member Equity
39000/5*2 15600 Lipscomb, Member Equity
39000/5*3 23400 Lin, Member Equity 189000 2 Cash 124000 Abrams, Member Equity
77500/5*2 3000 Lipscomb, Member Equity
7500/5*3 4500 Lin, Member Equity 131500

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