Statement of LLC Liquidation

Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members' equity prior to liquidation and asset realization on August 1 are as follows:

Lester	$24,600
Torres	56,900
Hearst	35,400
Total	$116,900

In winding up operations during the month of August, noncash assets with a book value of $153,800 are sold for $190,700, and liabilities of $51,400 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $14,500.

Question Content Area

a. Prepare a statement of LLC liquidation. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter "0".

	Cash +	Noncash Assets =	Liabilities +	Member Equity Lester (2/5) +	Member Equity Torres (2/5) +	Member Equity Hearst (1/5)
Balances before realization	$fill in the blank f3687ff7d01d030_1	$fill in the blank f3687ff7d01d030_2	$fill in the blank f3687ff7d01d030_3	$fill in the blank f3687ff7d01d030_4	$fill in the blank f3687ff7d01d030_5	$fill in the blank f3687ff7d01d030_6
Sale of assets and division of gain	fill in the blank f3687ff7d01d030_7	fill in the blank f3687ff7d01d030_8	fill in the blank f3687ff7d01d030_9	fill in the blank f3687ff7d01d030_10	fill in the blank f3687ff7d01d030_11	fill in the blank f3687ff7d01d030_12
Balances after realization	$fill in the blank f3687ff7d01d030_13	$fill in the blank f3687ff7d01d030_14	$fill in the blank f3687ff7d01d030_15	$fill in the blank f3687ff7d01d030_16	$fill in the blank f3687ff7d01d030_17	$fill in the blank f3687ff7d01d030_18
Payment of liabilities	fill in the blank f3687ff7d01d030_19	fill in the blank f3687ff7d01d030_20	fill in the blank f3687ff7d01d030_21	fill in the blank f3687ff7d01d030_22	fill in the blank f3687ff7d01d030_23	fill in the blank f3687ff7d01d030_24
Balances after payment of liabilities	$fill in the blank f3687ff7d01d030_25	$fill in the blank f3687ff7d01d030_26	$fill in the blank f3687ff7d01d030_27	$fill in the blank f3687ff7d01d030_28	$fill in the blank f3687ff7d01d030_29	$fill in the blank f3687ff7d01d030_30
Distribution of cash to members	fill in the blank f3687ff7d01d030_31	fill in the blank f3687ff7d01d030_32	fill in the blank f3687ff7d01d030_33	fill in the blank f3687ff7d01d030_34	fill in the blank f3687ff7d01d030_35	fill in the blank f3687ff7d01d030_36
Final balances	$fill in the blank f3687ff7d01d030_37	$fill in the blank f3687ff7d01d030_38	$fill in the blank f3687ff7d01d030_39	$fill in the blank f3687ff7d01d030_40	$fill in the blank f3687ff7d01d030_41	$fill in the blank f3687ff7d01d030_42

Question Content Area

b. Provide the journal entry for the final cash distribution to members. If an amount box does not require an entry, leave it blank.

blank	Accounts PayableCashHearst, DrawingLester, Member EquityTorres, Drawing	- Select -	- Select -
	Accounts ReceivableCashHearst, DrawingLester, DrawingTorres, Member Equity	- Select -	- Select -
	Accounts PayableCashHearst, Member EquityLester, DrawingTorres, Drawing	- Select -	- Select -
	CashHearst, DrawingHearst, Member EquityLester, Member EquityTorres, Member Equity	- Select -	- Select -

Question Content Area

c. What is the role of the income- and loss-sharing ratio in liquidating an LLC?

The income- and loss-sharing ratio is only used to

distribute the gain or loss determine the amount of cash to distribute allocate equity

on the realization of asset sales. It

is not

used for the final distribution.