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 $$260,000,$ $$65,000,$ and $$155,000,$ respectively. VC Partners contributed an additional $$70,000$ to Interactive Media, LLC$,$ on June $1,20$Y$2.$ Colin Campella received an annual salary allowance of $$150,800$ during $20$Y$2.$ The members$$ equity accounts are also credited with $18\%$ interest on each member$$s January $1$ capital balance. Any remaining income is to be shared in the ratio of $4$:$3$:$3$ among the three members. The revenues, expenses, and net income for Interactive Media, LLC$,$ for $20$Y$2$ were $$630,234,$ $$130,234$ and $$500,000,$ 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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.

blank

Schedule of Division of Income

Line Item Description VC Partners Colin Campella Active Graphics, LLC Total

Salary allowance Salary allowance

$Salary allowance

Salary allowance

$Salary allowance

Interest allowance $Interest allowance

Interest allowance

$Interest allowance

Interest allowance

Remaining income $(4$:$3$:$3)$ Remaining income $(4$:$3$:$3)$

Remaining income $(4$:$3$:$3)$

Remaining income $(4$:$3$:$3)$

Remaining income $(4$:$3$:$3)$

Net income $Net income

$Net income

$Net income

$Net income

Question Content Area

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.

TransactionAccountDebitCredit

$(1)$

Question Content Area

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.

TransactionAccountDebitCredit

$(2)$

Question Content Area

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.

Interactive Media, LLC

Statement of Members' Equity

For the Year Ended December $31,20$Y$2$

Line Item Description VC Partners Colin Campella Active Graphics, LLC Total

Balances, January $1,20$Y$2$ $Balances, January $1,20$Y$2$

$Balances, January $1,20$Y$2$

$Balances, January $1,20$Y$2$

$Balances, January $1,20$Y$2$

Investment by member Investment by member

Investment by member

Investment by member

Investment by member

Net income for the year Net income for the year

Net income for the year

Net income for the year

Net income for the year

Member withdrawals Member withdrawals

Member withdrawals

Member withdrawals

Member withdrawals

Balances, December $31,20$Y$2$ $Balances, December $31,20$Y$2$

$Balances, December $31,20$Y$2$

$Balances, December $31,20$Y$2$

$Balances, December $31,20$Y$2$

Question Content Area

e 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.