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	$28,800
Torres	66,600
Hearst	41,400
Total	$136,800

In winding up operations during the month of August, noncash assets with a book value of $180,000 are sold for $223,200, and liabilities of $58,200 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $15,000.

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".

Arcadia Sales, LLC
Statement of LLC Liquidation
For the Period August 1-31
	Cash +	Noncash Assets =	Liabilities +	Member Equity Lester (2/5) +	Member Equity Torres (2/5) +	Member Equity Hearst (1/5)
Balances before realization	$	$	$	$	$	$
Sale of assets and division of gain	+			+	+	+
Balances after realization	$	$	$	$	$	$
Payment of liabilities
Balances after payment of liabilities	$	$	$	$	$	$
Distribution of cash to members
Final balances	$	$	$	$	$	$

b. Provide the journal entry for the final cash distribution to members. For a compound transaction, if an amount box does not require an entry, leave it blank.

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

The income- and loss-sharing ratio is only used to ________________ on the realization of asset sales. It ______________ used for the final distribution.