Reference no: EM132693110
Problem - 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 $49,000
Torres 61,000
Hearst 27,000
Total $137,000
In winding up operations during the month of August, noncash assets with a book value of $146,000 are sold for $158,000, and liabilities of $35,000 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $26,000.
Required -
a. Prepare a statement of LLC liquidation.
b. Provide the journal entry for the final cash distribution to members.
c. What is the role of the income- and loss-sharing ratio in liquidating an LLC?
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