Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observ
ID: 2530191 • Letter: M
Question
Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $200,000, $40,000, and $160,000, respectively. WLKT Partners contributed an additional $50,000 to Marvel Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $55,000 during 20Y2. The members’ equity accounts are also credited with 10% 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 20Y2 were $1,260,000, $900,000, and $360,000, 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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.
b. Prepare the journal entries to close the (1) net income and (2) withdrawals to the individual member equity accounts. For a compound entry, if an amount box does not require an entry, leave it blank.
(1)
(2)
c. Prepare a statement of members' equity for 20Y2. If an amount box does not require an entry, leave it blank or enter zero.
Schedule of Division of Income WLKT Partners Madison Sanders Observer Newspaper, LLC Total Salary allowance $ $ Interest allowance $ $ Remaining income (4:3:3) Net income $ $ $ $Explanation / Answer
Answer a. Schedule of Division of Income WLKT Partners Madison Sanders Observer Newspaper, LLC Total Salary Allowance - 55,000.00 - 55,000.00 Interest Allowance 20,000.00 4,000.00 16,000.00 40,000.00 Remaining Income (4:3:3) 106,000.00 79,500.00 79,500.00 265,000.00 Net Income 126,000.00 138,500.00 95,500.00 360,000.00 Answer b. Journal Entry Date Particulars Dr. Amt. Cr. Amt. 1 Income Summary 360,000.00 WLKT Partners, Capital 126,000.00 Madison Sanders, Capital 138,500.00 Observer Newspaper, LLC, Capital 95,500.00 (To record the close of net income) 2 WLKT Partners, Capital 20,000.00 Madison Sanders, Capital 59,000.00 Observer Newspaper, LLC, Capital 16,000.00 WLKT Partners, Drawing 20,000.00 Madison Sanders, Drawing 59,000.00 Observer Newspaper, LLC, Drawing 16,000.00 (To record the close of drawings accounts) Answer c. Marvel Media, LLC Statement of Members' Equity For the Years Ended Dec 31, 20Y2 WLKT Partners Madison Sanders Observer Newspaper, LLC Total Balance, Jan 1, 20Y2 200,000.00 40,000.00 160,000.00 400,000.00 Capital Additions 50,000.00 - - 50,000.00 Sub-total 250,000.00 40,000.00 160,000.00 450,000.00 Net Income for the Year 126,000.00 138,500.00 95,500.00 360,000.00 Sub-total 376,000.00 178,500.00 255,500.00 810,000.00 Members' Withdrawl (20,000.00) (59,000.00) (16,000.00) (95,000.00) Balance, Dec 31, 20Y2 356,000.00 119,500.00 239,500.00 715,000.00
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