Question
Interactive Media, LLC, has three members: VC Partners, Colin Campella, and Active Graphics, LLC. On January 1, 20Y2, the three members had equity of $180,000,
Interactive Media, LLC, has three members: VC Partners, Colin Campella, and Active Graphics, LLC. On January 1, 20Y2, the three members had equity of $180,000, $45,000, and $110,000, respectively. VC Partners contributed an additional $50,000 to Interactive Media, LLC, on June 1, 20Y2. Colin Campella received an annual salary allowance of $104,400 during 20Y2. The members equity accounts are also credited with 12% 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 Interactive Media, LLC, for 20Y2 were $962,121, $692,121 and $270,000, respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.
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a. Determine the division of income among the three members. If an amount box does not require an entry, leave it blank.
Line Item Description | VC Partners | Colin Campella | Active Graphics, LLC | Total |
---|---|---|---|---|
Salary allowance | 0 | $104400 | 0 | 104400 |
Interest allowance | 21600 | 5400 | 13200 | 40200 |
Remaining income (4:3:3) | 50160 | 37620 | 37620 | 125400 |
Net income | 71760 | 147420 | 50820 | 270000 |
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a. Set up a column for each member and a total column. Allocate salary allowances, consider interest allowance, then distribute the remaining income based on the income sharing agreement.
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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.
Transaction | Account | Debit | Credit |
---|---|---|---|
(1) | Revenues | 962121 | 0 |
Expenses | 0 | 692121 | |
VC Partners, Member Equity | 0 | 71760 | |
Colin Campella, Member Equity | 0 | 147420 | |
Active Graphics, LLC, Member Equity | 0 | 50820 |
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b. Close revenues and expenses to the member equity accounts.
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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.
Transaction | Account | Debit | Credit |
---|---|---|---|
(2) | VC Partners, Member Equity | 21600 | 0 |
Colin Campella, Member Equity | ? | 0 | |
Active Graphics, LLC, Member Equity | 13200 | 0 | |
VC Partners, Drawing | 0 | 21600 | |
colin Campella, Drawing | 0 | ? | |
Active Graphics, LLC, Drawing | 0 | 13200 |
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c. Close the drawing accounts to the respective equity accounts.
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d. Prepare a statement of members equity for 20Y2. 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.
Line Item Description | VC Partners | Colin Campella | Active Graphics, LLC | Total |
---|---|---|---|---|
Balances, January 1, 20Y2 | 180000 | 45000 | 110000 | 335000 |
Investment by member | 50000 | 0 | 0 | 50000 |
Net income for the year | 71760 | 147420 | 50820 | 270000 |
Member withdrawals | -21600 | ? | -13200 | ? |
Balances, December 31, 20Y2 | 280160 | ? | 147620 | ? |
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