1. 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, 20Y2, the three members had equity of $175,000, $45,000, and $105,000, respectively. WLKT Partners contributed an additional $40,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $101,500 during 20Y2. The members equity accounts are also credited with 15% 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 $440,601, $140,601 and $300,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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		$		$
   Interest allowance	$		$
   Remaining income (4:3:3)
   Net income	$	$	$	$

   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)	Revenues
   	Expenses
   	WLKT Partners, Member Equity
   	Madison Sanders, Member Equity
   	Observer Newspaper, LLC, Member Equity
   (2)	WLKT Partners, Member Equity
   	Madison Sanders, Member Equity
   	Observer Newspaper, LLC, Member Equity
   	WLKT Partners, Drawing
   	Madison Sanders, Drawing
   	Observer Newspaper, LLC, Drawing

   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	$	$	$	$

   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.

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