LLC Net Income and Statement of Members\' Equity Marvel Media, LLC, has three me
ID: 2567292 • Letter: L
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 $350,000, $90,000, and $210,000, respectively. WLKT Partners contributed an additional $90,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $203,000 during 20Y2. The members’ equity accounts are also credited with 12% 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 $565,923, $45,923 and $520,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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.
c. Prepare a statement of members' equity for 20Y2. If an amount box does not require an entry, leave it blank.
d What are the advantages of an income-sharing agreement for the members of this LLC?
Without an income-sharing agreement, each member be credited with an equal proportion of the total earnings, or one-third each. Separate contributions be acknowledged in the income-sharing formula.
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
d. Without an income-sharing agreement, each member will be credited with an equal proportion of the total earnings, or one-third each. Separate contributions will be acknowledged in the income-sharing formula.
a. Marvel Media, LLC Schedule of Division of Income For the Year Ended December 31, 20Y2 WLKT Partners Madison Sanders Observer Newspaper, LLC Total Salary allowance 203000 203000 Interest allowance 42000 10800 25200 78000 Remaining income (4:3:3) 95600 71700 71700 239000 Net income 137600 285500 96900 520000Related Questions
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