Interactive Media, LLC$,$ has three members: VC Partners, Colin Campella, and Active Graphics, LLC$.$ On January $1,20$Y$2,$ the three members had equity of $$400,000,$ $$125,000,$ and $$175,000,$ respectively. VC Partners contributed an additional $$75,000$ to Interactive Media, LLC$,$ on June $1,20$Y$2.$ Colin Campella received an annual salary allowance of $$90,000$ during $20$Y$2.$ The members$$ equity accounts are also credited with $10\%$ interest on each member$$s January $1$ capital balance. Any remaining income is to be shared in the ratio of $4$:$3$:$3$ among the three members. The revenues, expenses, and net income for Interactive Media, LLC$,$ for $20$Y$2$ were $$2,340,000,$ $$1,820,000,$ and $$520,000,$ respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.

Question Content Area

a$.$ Determine the division of income among the three members. If an amount box does not require an entry, leave it blank.

b$.$ Journalize the entry to close the revenues and expenses to the member equity accounts. If an amount box does not require an entry, leave it blank.

c$.$ Journalize the closing journal entry for the member withdrawals of salary and interest. If an amount box does not require an entry, leave it blank.

d$.$ Prepare a statement of members$$ equity for $20$Y$2.$ If an amount box does not require an entry, leave it blank. For amounts that should be subtracted, enter the amount with a minus sign.

d What are the advantages of an income$-$sharing agreement for the members of this LLC$?$

Without an income$-$sharing agreement, each member fill in the blank $1$ of $2$

be credited with an equal proportion of the total earnings, or one$-$third each. Separate contributions fill in the blank $2$ of $2$

be acknowledged in the income$-$sharing formula.