Exploit Media, LLC, has three members: WACS Partners, Elyse OReilly, and Encounter Newspaper, LLC. On January 1, 20Y2, the three members had equity of $205,400, $37,700, and $175,900, respectively. WACS Partners contributed an additional $47,400 to Exploit Media, LLC, on June 1, 20Y2. Elyse OReilly received an annual salary allowance of $54,500 during 20Y2. The members equity accounts are also credited with 20% interest on each members 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 Exploit Media, LLC, for 20Y2 were $1,230,000, 891,400 and $338,600 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.
Instructions Exploit Media, LLC, has three members: WACS Partners, Elyse O'Reilly, and Encounter Newspaper, LLC. On January 1, 20Y2, the three members had equity of $205,400, $37,700, and $175,900, respectively. WACS Partners contributed an additional $47,400 to Exploit Media, LLC, on June 1, 20Y2. Elyse O'Reilly received an annual salary allowance of $54,500 during 20Y2. The members' equity accounts are also credited with 20% 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 Exploit Media, LLC, for 20Y2 were $1,230,000, 891,400 and $338,600 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members. Required: a. Determine the division of income among the three members. If an amount box does not require an entry, leave it blank. b. Prepare the journal entry to close the revenues, expenses, and withdrawals to the individual member equity accounts. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. c. Prepare a statement of members' equity for 20Y2. A decrease to members' equity should be entered as a negative amount. If an amount box does not require an entry, leave it blank. d. What are the advantages of an income-sharing agreement for the members of this LLC? a. Determine the division of income among the three members. If an amount box does not require an entry, leave it blank. Schedule of Division of Income 1 WACS Partners Elyse O'Reilly Encounter Newspaper, LLC 2 Salary allowance 3 Interest allowance 4 Remaining income (4:3:3) 5 Net income Total 1 2 3 4 5 6 7 8 9 10 11 12 DATE DESCRIPTION Closing Entries JOURNAL POST. REF. DEBIT CREDIT ACCOUNTING EQUATION LIABILITIES ASSETS EQUITY c. Prepare a statement of members' equity for 20Y2. A decrease to members' equity should be entered as a negative amount. If an amount box does not require an entry, leave it blank. Exploit Media, LLC Statement of Members' Equity For the Year Ended December 31, 20Y2 1 WACS Partners Encounter Total Newspaper, LLC 2 Balances, January 1, 20Y2 3 Capital additions 4 Net income for the year 5 Member withdrawals 6 Balances, December 31, 20Y2 Elyse O'Reilly d. What are the advantages of an income-sharing agreement for the members of this LLC? Without an income-sharing agreement, each member be acknowledged in the income-sharing formula. be credited with an equal proportion of the total earnings, or one-third each. Separate contributions
