Reference no: EM132878143
Problem - Dividing LLC net income and statement of members' equity - Macro Media, LLC, has three members: WLKT Partners, Amanda Nelson, and Daily Sentinel Newspaper, LLC. On January 1, 2012, the three members had equity of $250,000, $50,000, and $140,000, respectively. WLKT Partners contributed an additional $50,000 to Macro Media, LLC, on June 1, 2012. Amanda Nelson received an annual salary allowance of $88,700 during 2012. The members' equity accounts are also credited with 10% 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 net income for Macro Media, LLC, for 2012 was $720,000. Amounts equal to the salary and interest allowances were withdrawn by the members.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 entry to close the net income and withdrawals to the individual member equity accounts.
c. Prepare a statement of members' equity for 2012.
d. What are the advantages of an income-sharing agreement for the members of this LLC?
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