Instructions Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 2012, the three members had equity of $200,000, $37,400, and $163,500, respectively. WLKT Partners contributed an additional $48,100 to Marvel Media, LLC, on June 1, 2012. Madison Sanders received an annual salary allowance of $59,700 during 2072. 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 43:3 among the three members, members, The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,263,600, 891,900 and $371,700 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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. B. Prepare the journal entries to close the net income and withdrawals to the individual member equity accounts. Refer to the Chart of Accounts for exact wording of account titles. 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? Chart of Accounts ASSETS REVENUE 110 Cash 610 Revenues EXPENSES ws 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Office Supplies 118 Store Supplies 119 Prepaid Insurance 510 Expenses 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 120 Land 123 Equipment 124 Accumulated Depreciation Equipment 129 Asset Revaluations 133 Patent 537 Cash Short and Over Chart of Accounts 133 Patent 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Madison Sanders, Member Equity 311 Madison Sanders, Drawing 312 Observer Newspaper, LLC, Member Equity 313 Observer Newspaper, LLC, Drawing 314 WLKT Partners, Member Equity 315 WLKT Partners, Drawing Schedule of Division of Income A Determine the division of income among the three members Schedule of Division of Income Madison Sanders Total WIKT Partners 1 Observer Newspaper, LLC 7 Salary allowance 3 Interest allowance Remaining income (4:33) Net income Joumal JOURNAL APPARIT ASSETS DATE POST RET CREDIT DESCRIPTION Closing Entries 1 3 10 11 12 lemn Umes quity Instructions Chart of Accounts Schedule of Division of Income Journal HI MO Statement of Members' Equity C Prepare a statement of members' equity for 2012 Marvel Media, LLC Statement of Members Equity Year Ended December 31, 20Y2 For WILKT Partners Madison Sanders Observer Newspaper, LLC Total 3 Balances, January 1, 20Y2 3 Capital additions 5 Net income for the year Member withdrawals X Balances, December 31, 20Y2 LLC net income and statement of members' equity Instructions Chart of Accounts Schedule of Division of income Journal Final Question D. What are the advantages of an income-sharing agreement for the members of this LLC? Without an income-sharing agreement, each member be credited with an equal proportion of the total earnings, or one-third each. Separate contributions be acknowledged in the income-sharing formula
