LLC Net Income and Statement of Members' Equity Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 2012, the three members had equity of $245,000, $60,000, and $145,000, respectively. WLKT Partners contributed an additional $60,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $142,100 during 2042. The members' equity accounts are also credited with 12% 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 Marvel Media, LLC, for 20Y2 were $930,265, $570,265 and $360,000 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members. 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 WLKT Partners Madison Sanders Observer Newspaper, LLC Total Salary allowance 142,100 142,100 Interest allowance $ 24,500 6,000 X $ 14,500 X Remaining income (4:3:3) Net income $ Feedback b. Prepare the journal entries to close the (1) net income and (2) withdrawals to the individual member equity accounts. For a compound entry, if an amount box does not require an entry, leave it blank. (1) (2) ml c. Prepare a statement of members' equity for 20Y2. If an amount box does not require an entry, leave it blank. Marvel Media, LLC Statement of Members' Equity For the Year Ended December 31, 20Y2 WLKT Partners Madison Sanders Observer Newspaper, LLC Total Balances, January 1, 20Y2 Capital additions $ $ Net income for the year $ $ Member withdrawals Balances, December 31, 20Y2 $ Feedback d What are the advantages of an income-sharing agreement for the members of this LLC? be credited with an equal proportion of the total earnings, or one-third each. Separate contributions be Without an income-sharing agreement, each member acknowledged in the income-sharing formula. Dividing Partnership Income Tyler Hawes and Piper Albright formed a partnership, investing $96,000 and $144,000, respectively. Determine their participation in the year's net income of $270,000 under each of the following independent assumptions: a. No agreement concerning division of net income. b. Divided in the ratio of original capital investment. c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3. d. Salary allowances of $40,000 and $46,000, respectively, and the balance divided equally. e. Allowance of interest at the rate of 5% on original investments, salary allowances of $40,000 and $46,000, respectively, and the remainder divided equally. Hawes Albright (a) $ 135,000 $ 135,000 (b) $ 108,000 $ 162,000 (c) $ 108,000 $ 162,000 (d) $ 130,500 X $ 139,500 x (e) $ 129,300 x $ 140,700 x
