The statement of members' equity for Bonanza, LLC, follows:Bonanza, LLCStatement of Members' EquityFor the Years Ended December 31, 20Y3 and 20Y4IdahoSilverProperties,LLC,MemberEquityThomasStreams,LLC,MemberEquityTotalMembers'Dunn,MemberEquityEquity$ 580,000Members' equity, January 1, 20Y3$273,000$307,000Net income57,000133,000190,000$ 770,000Members' equity, December 31, 20Y3Dunn contribution, January 1, 20OY4$330,000$440,000$220,0003,0007,000230,000137,500250,000Net income62,50050,000Member withdrawals(32,000)$363,500(48,000)(40,000)$230,000(120,000)$1,130,000$536,500Members'equity, December 31, 20Y4a. What was the income-sharing ratio in 20Y3?b. What was the income-sharing ratio in 20Y4?c. How much cash did Thomas Dunn contribute to Bonanza, LLC, for his interest?d. Why do the member equity accounts of Idaho Properties, LLC, and Silver Streams, LLC,have positive entries for Thomas Dunn's contribution?e. What percentage interest of Bonanza did Thomas Dunn acquire?f. Why are withdrawals less than net income?

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Asked Dec 19, 2019
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The statement of members' equity for Bonanza, LLC, follows:
Bonanza, LLC
Statement of Members' Equity
For the Years Ended December 31, 20Y3 and 20Y4
Idaho
Silver
Properties,
LLC,
Member
Equity
Thomas
Streams,
LLC,
Member
Equity
Total
Members'
Dunn,
Member
Equity
Equity
$ 580,000
Members' equity, January 1, 20Y3
$273,000
$307,000
Net income
57,000
133,000
190,000
$ 770,000
Members' equity, December 31, 20Y3
Dunn contribution, January 1, 20OY4
$330,000
$440,000
$220,000
3,000
7,000
230,000
137,500
250,000
Net income
62,500
50,000
Member withdrawals
(32,000)
$363,500
(48,000)
(40,000)
$230,000
(120,000)
$1,130,000
$536,500
Members'equity, December 31, 20Y4
a. What was the income-sharing ratio in 20Y3?
b. What was the income-sharing ratio in 20Y4?
c. How much cash did Thomas Dunn contribute to Bonanza, LLC, for his interest?
d. Why do the member equity accounts of Idaho Properties, LLC, and Silver Streams, LLC,
have positive entries for Thomas Dunn's contribution?
e. What percentage interest of Bonanza did Thomas Dunn acquire?
f. Why are withdrawals less than net income?
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The statement of members' equity for Bonanza, LLC, follows: Bonanza, LLC Statement of Members' Equity For the Years Ended December 31, 20Y3 and 20Y4 Idaho Silver Properties, LLC, Member Equity Thomas Streams, LLC, Member Equity Total Members' Dunn, Member Equity Equity $ 580,000 Members' equity, January 1, 20Y3 $273,000 $307,000 Net income 57,000 133,000 190,000 $ 770,000 Members' equity, December 31, 20Y3 Dunn contribution, January 1, 20OY4 $330,000 $440,000 $220,000 3,000 7,000 230,000 137,500 250,000 Net income 62,500 50,000 Member withdrawals (32,000) $363,500 (48,000) (40,000) $230,000 (120,000) $1,130,000 $536,500 Members'equity, December 31, 20Y4 a. What was the income-sharing ratio in 20Y3? b. What was the income-sharing ratio in 20Y4? c. How much cash did Thomas Dunn contribute to Bonanza, LLC, for his interest? d. Why do the member equity accounts of Idaho Properties, LLC, and Silver Streams, LLC, have positive entries for Thomas Dunn's contribution? e. What percentage interest of Bonanza did Thomas Dunn acquire? f. Why are withdrawals less than net income?

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Expert Answer

Step 1

a.

 

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The calculation of income sharing ratio between Member IP and SS in the year 20Y3 is as follows: IncomeSharing $57,000 -x100 $190,000 Ratio of Member IP =30% IncomeSharing S133,000 -x100 $190,000 Ratio of Member SS =70% Hence the income sharing ratio between Member IP and SS in the year 20Y3 is 3:7.

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Step 2

b.

 

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The calculation of income sharing ratio between Member IP, SS and TD in the year 20Y4 is as follows: IncomeSharing $62,500 -x100 Ratio of Member IP | S250,000 = 25% IncomeSharing $137,500 -x100 $250,000 Ratio of Member SS) =55% IncomeSharing $50,000 x100 $250,000 Ratio of Member TD = 20% Income Sharing Ratio = 25:55:20 = 5:11:4 Hence the income sharing ratio between Member IP, SS and TD in the year 20Y4 is 5:11:4.

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Step 3

c.

Determine the amount paid by the Member TD to the LLC for his interest:

The amount paid by the Member TD to the LLC for his interest is $230,000, out of which $220,000 was credited to the member TD’ equity account and rest $10,000 was paid to two the existing members of LLC on the basis of their in...

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IP, LLC ss, LLC | TD, LLC Total Member's equity on January 1, 20Υ4 $ 3,33,000 $ 4,47,000 $ 2,20,000 S 10,00,000 Working note: Calculation of TD’s equity interest after admission in B: TD's equity interest $220,000 -x100 after admission S1,000,000 =22%

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