Ellis, Roane, and Clausen are members of City Signs, LLC, sharing income and losses in the ratio

Question:

Ellis, Roane, and Clausen are members of City Signs, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability corporation (LLC). The members’ equity prior to liquidation and asset realization on March 1, 2006, are:

Ellis ......$28,000

Roane ...... 45,000

Clausen ...... 12,000

Total .......$85,000

In winding up operations during the month of March, noncash assets with a book value of $125,000 are sold for $96,000, and liabilities of $44,000 are satisfied. Prior to realization, City Signs has a cash balance of $4,000.

a. Prepare a statement of LLC liquidation.

b. Provide the journal entry for the final cash distribution to members.

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