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	$27,900
Torres	64,500
Hearst	40,100
Total	$132,500

In winding up operations during the month of August, noncash assets with a book value of $174,200 are sold for $216,000, and liabilities of $58,200 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $16,500.

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.

	Lester, Member Equity
	Torres, Member Equity
	Hearst, Member Equity
	Cash

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.