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Statement of members' equity, admitting new member The statement of members’ equity for Bonanza, LLC, follows: 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?

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 12, Problem 12.17EX
Textbook Problem

Statement of members' equity, admitting new member

The statement of members’ equity for Bonanza, LLC, follows:

Chapter 12, Problem 12.17EX, Statement of members' equity, admitting new member The statement of members equity for Bonanza, LLC,

  1. a. What was the income-sharing ratio in 20Y3?
  2. b. What was the income-sharing ratio in 20Y4?
  3. c. How much cash did Thomas Dunn contribute to Bonanza, LLC, for his interest?
  4. d. Why do the member equity accounts of Idaho Properties, LLC, and Silver Streams, LLC, have positive entries for Thomas Dunn's contribution?
  5. e. What percentage interest of Bonanza did Thomas Dunn acquire?
  6. f. Why are withdrawals less than net income?

Expert Solution

a.

To determine

Limited Liability Company

It is that form of organization which is formed as a legal entity that provides limited liability to the owners. It has a common seal.

 The income sharing ratio in 20Y3.

Explanation of Solution

The income sharing ratio is the ratio in which the members share the income earned from LLC. The income sharing ratio is determined by dividing the income received by each member of LLC by the total income of LLC.

The calculation of income sharing ratio between Member IP and SS in the year 20Y3 is as follows:

IncomeSharingRatioofMemberIP}=$57,000$190,000×100

Expert Solution

b.

To determine

 The income sharing ratio in 20Y4.

Expert Solution

c.

To determine

 The amount paid by the Member TD to the LLC for his interest.

Expert Solution

d.

To determine

To explain:  The reason why Member IP and SS account shows positive entries for TD’s contribution?

Expert Solution

e.

To determine

 The portion of LLC acquired by Member TD.

Expert Solution

(f)

To determine

To explain:  The reason of less withdrawal than the net income.

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