Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members’ equity prior to liquidation and asset realization on August 1 are as follows: Lester $48,550 Torres 57,430 Hearst 29,680 Total $135,660 In winding up operations during the month of August, noncash assets with a book value of $154,940 are sold for $166,430, and liabilities of $47,780 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $28,500. Required: a. Prepare a statement of LLC liquidation. For those boxes in which you must enter negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for sale of assets, payment of liabilities, receipt of deficiency, or cash distribution rows, the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0". b. Provide the journal entry for the final cash distribution to members on August 31. c. What is the role of the income- and loss-sharing ratio in liquidating an LLC? Part a - attached Part b - attached Part c - 1c) What is the role of the income- and loss-sharing ratio in liquidating an LLC? Select the best answer to complete the two sentences below. The income- and loss-sharing ratio is... - never used in a Limited Liability Company liquidation. - only used to distribute the gain or loss on the realization of asset sales. - often used for the final distribution. 2c) After all gains and losses on realization have been divided and any member deficiencies have been paid or allocated, the final distribution is based upon - the partners’ wishes. - the credit balances in the member equity accounts. - the income- and loss-sharing ratio.
Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members’ equity prior to liquidation and asset realization on August 1 are as follows: Lester $48,550 Torres 57,430 Hearst 29,680 Total $135,660 In winding up operations during the month of August, noncash assets with a book value of $154,940 are sold for $166,430, and liabilities of $47,780 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $28,500. Required: a. Prepare a statement of LLC liquidation. For those boxes in which you must enter negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for sale of assets, payment of liabilities, receipt of deficiency, or cash distribution rows, the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0". b. Provide the journal entry for the final cash distribution to members on August 31. c. What is the role of the income- and loss-sharing ratio in liquidating an LLC? Part a - attached Part b - attached Part c - 1c) What is the role of the income- and loss-sharing ratio in liquidating an LLC? Select the best answer to complete the two sentences below. The income- and loss-sharing ratio is... - never used in a Limited Liability Company liquidation. - only used to distribute the gain or loss on the realization of asset sales. - often used for the final distribution. 2c) After all gains and losses on realization have been divided and any member deficiencies have been paid or allocated, the final distribution is based upon - the partners’ wishes. - the credit balances in the member equity accounts. - the income- and loss-sharing ratio.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter2: The Basics Of Record Keeping And Financial Statement Preparation: Balance Sheet
Section: Chapter Questions
Problem 9E
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Question
Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members’ equity prior to liquidation and asset realization on August 1 are as follows:
Lester | $48,550 |
Torres | 57,430 |
Hearst | 29,680 |
Total | $135,660 |
In winding up operations during the month of August, noncash assets with a book value of $154,940 are sold for $166,430, and liabilities of $47,780 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $28,500.
Required:
a. | Prepare a statement of LLC liquidation. For those boxes in which you must enter negative numbers (balance deficiencies, payments, cash distributions, divisions of loss), use a minus sign. If there is no amount to be reported for sale of assets, payment of liabilities, receipt of deficiency, or cash distribution rows, the cell can be left blank. However, in the balance rows, a balance of zero MUST be indicated by entering "0". |
b. | Provide the |
c. | What is the role of the income- and loss-sharing ratio in liquidating an LLC? |
Part a - attached
Part b - attached
Part c -
1c) What is the role of the income- and loss-sharing ratio in liquidating an LLC? Select the best answer to complete the two sentences below.
The income- and loss-sharing ratio is...
- never used in a Limited Liability Company liquidation.
- only used to distribute the gain or loss on the realization of asset sales.
- often used for the final distribution.
2c) After all gains and losses on realization have been divided and any member deficiencies have been paid or allocated, the final distribution is based upon
- the partners’ wishes.
- the credit balances in the member equity accounts.
- the income- and loss-sharing ratio.
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