Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observ

Question

Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 2016, 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, 2016. Madison Sanders received an annual salary allowance of $55,000 during 2016. 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 net income for Marvel Media, LLC, for 2016 was $360,000. Amounts equal to the salary and interest allowances were withdrawn by the members.

Required: A. Determine the division of income among the three members. B. Prepare the journal entries to close the net income and withdrawals to the individual member equity accounts. Refer to the Chart of Accounts for exact wording of account titles. C. Prepare a statement of members’ equity for 2016.

Explanation / Answer

a. Determine the division of income among the three members.

b. Prepare the journal entry to close the revenues, expenses, and withdrawals to the individual's member equity accounts.

( interest @ 10% on opening capital withdrawn by partners, and Madison also withdrawn salary )

c. Prepare a statement of members' equity for 2016.

Net income $   360,000.00 Ratio 4.3.3 Weight Share WLKT partners 4 $144,000.00 madison 3 $108,000.00 Observer 3 $108,000.00 Total 10 $360,000.00

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