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LLC net income and statement of members’ equity Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2 r 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, 20Y2. Madison Sanders received an annual salary allowance of $55,000 during 20Y2. 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 revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,260,000, $900,000, and $360,000, respectively. Amounts equal to the salary and interest allowances were withdrawn by the members. 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 member equity accounts. c. Prepare a statement of members’ equity for 20Y2. d. What are the advantages of an income-sharing agreement for the members of this LLC?

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 12.8EX
Textbook Problem

LLC net income and statement of members’ equity

Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2r 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, 20Y2. Madison Sanders received an annual salary allowance of $55,000 during 20Y2. 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 revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,260,000, $900,000, and $360,000, respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.

  1. a. Determine the division of income among the three members.
  2. b. Prepare the journal entry to close the revenues, expenses, and withdrawals to the individual member equity accounts.
  3. c. Prepare a statement of members’ equity for 20Y2.
  4. d. What are the advantages of an income-sharing agreement for the members of this LLC?

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Chapter 12 Solutions

Accounting
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