a search Print tem Dividing LiC Income Martin Farley and Ashley Clark formed a l

Question

a search Print tem Dividing LiC Income Martin Farley and Ashley Clark formed a limited lablity company with an operating agreement that provided a salary alowance of $59,000 and $47,000 to each member mpectively. Inaddtion, the operating agreenet speoned aninconrtharng ratio of 3: 2. The bo merben-hdrew nts eur tother saary alowancn Revenues were 1668,000 and expenses were $520,000, for a net income of $148,000 a. Determine the division of S148,000 inome for the ye Schedule of Division of Net Inceme Farley ClarkTetal Salany allowance Renaining income compound nsaction, if an the monten mer . b. Provide journal emnes to dese the C1) reverun and expenses and(2) drewing accounts an entry, leave it blank work saved 3

Explanation / Answer

Net income distribution workings:

Farly share= 42000*3/5= 25200

Clark share= 42000*2/5= 16800

c. If the net income of the llc were less than the sum of the salary allowances, capital account of members would still be credited with their salary allowances. The difference between the net income and total salary allowance would be allocated to each partner as deficit, according to the profit and loss sharing ratio

a. Farley Clark Total Salary allowance        59,000        47,000        1,06,000 Remaining income        25,200        16,800           42,000 Net income        84,200        63,800        1,48,000 b. 1 Income summary     1,48,000 Farley capital        84,200 Clark capital        63,800 2 Farley capital        59,000 Clark capital        47,000 Farley drawings        59,000 Clark drawings        47,000

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