Marvel Media, LLC, has three members WLKT Partners, Madison Sanders, and Observer Newspaper, LLC On January 1, 20Y2, the three members had equity of $213,200, $36,000, and $159,200, respectively WLKT Partners contributed an additional $49,100 to Marvel Media, LLC, on June 1, 20Y2 Madison Sanders received an annual salary allowance of $54,500 during 20Y2 The members equity accounts are also credited with 20 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 members The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,255,500, 872,400 and $383,100 respectively Amounts equal to the salary and interest allowances were withdrawn by the members Required A Determine the division of income among the three members B Prepare the journal entries to close the net income and withdrawals to the individual member equity accounts Refer to the Chart of Accounts for exact wording of account titles C Prepare a statement of members equity for 20Y2 D What are the advantages of an income sharing agreement for the members of this LLC Chart of Accounts CHART OF ACCOUNTS Marvel Media, LLC General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Inventory 117 Office Supplies 118 Store Supplies 119 Prepaid Insurance 120 Land 123 Equipment 124 Accumulated Depreciation Equipment 129 Asset Revaluations 133 Patent LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Madison Sanders, Member Equity 311 Madison Sanders, Drawing 312 Observer Newspaper, LLC, Member Equity 313 Observer Newspaper, LLC, Drawing 314 WLKT Partners, Member Equity 315 WLKT Partners, Drawing REVENUE 610 Revenues EXPENSES 510 Expenses 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense Schedule of Division of Income A Determine the division of income among the three members Schedule of Division of Income 1 WLKT Partners Madison Sanders Observer Newspaper, LLC Total 2 Salary allowance 3 Interest allowance 4 Remaining income (4 3 3) 5 Net income Journal B Prepare the journal entries to close the net income and withdrawals to the individual member equity accounts Refer to the Chart of Accounts for exact wording of account titles PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST REF DEBIT CREDIT ASSETS LIABILITIES EQUITY 1 Closing Entries 2 3 4 5 6 7 8 9 10 11 12 Statement of Members Equity C Prepare a statement of members equity for 20Y2 Marvel Media, LLC Statement of Members Equity For the Year Ended December 31, 20Y2 1 WLKT Partners Madison Sanders Observer Newspaper, LLC Total 2 Balances, January 1, 20Y2 3 Capital additions 4 5 Net income for the year 6 7 Member withdrawals 8 Balances, December 31, 20Y2 Final Question 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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Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $213,200,

Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $213,200, $36,000, and $159,200, respectively. WLKT Partners contributed an additional $49,100 to Marvel Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $54,500 during 20Y2. The members equity accounts are also credited with 20% 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. members. The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,255,500, 872,400 and $383,100 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.

	Required:
A.	Determine the division of income among the three members.
B.	Prepare the journal entries to close the net income and withdrawals to the individual member equity accounts. Refer to the Chart of Accounts for exact wording of account titles.
C.	Prepare a statement of members equity for 20Y2.
D.	What are the advantages of an income-sharing agreement for the members of this LLC?

Chart of Accounts

CHART OF ACCOUNTS

Marvel Media, LLC

General Ledger

	ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Interest Receivable
115	Notes Receivable
116	Inventory
117	Office Supplies
118	Store Supplies
119	Prepaid Insurance
120	Land
123	Equipment
124	Accumulated Depreciation-Equipment
129	Asset Revaluations
133	Patent

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Madison Sanders, Member Equity
311	Madison Sanders, Drawing
312	Observer Newspaper, LLC, Member Equity
313	Observer Newspaper, LLC, Drawing
314	WLKT Partners, Member Equity
315	WLKT Partners, Drawing

	REVENUE
610	Revenues

	EXPENSES
510	Expenses
520	Salaries Expense
521	Advertising Expense
522	Depreciation Expense-Equipment
523	Delivery Expense
524	Repairs Expense
529	Selling Expenses
531	Rent Expense
533	Insurance Expense
534	Office Supplies Expense
535	Store Supplies Expense
536	Credit Card Expense
537	Cash Short and Over
538	Bad Debt Expense
539	Miscellaneous Expense
710	Interest Expense

Schedule of Division of Income

A. Determine the division of income among the three members.

Schedule of Division of Income

1		WLKT Partners	Madison Sanders	Observer Newspaper, LLC	Total
2	Salary allowance
3	Interest allowance
4	Remaining income (4:3:3)
5	Net income

Journal

B. Prepare the journal entries to close the net income and withdrawals to the individual member equity accounts. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 10

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Closing Entries
2
3
4
5
6
7
8
9
10
11
12

Statement of Members Equity

C. Prepare a statement of members equity for 20Y2.

Marvel Media, LLC

Statement of Members Equity

For the Year Ended December 31, 20Y2

1		WLKT Partners	Madison Sanders	Observer Newspaper, LLC	Total
2	Balances, January 1, 20Y2
3	Capital additions
4
5	Net income for the year
6
7	Member withdrawals
8	Balances, December 31, 20Y2

Final Question

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.