Reference no: EM132693049
Problem - Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $200,000, $40,000, and $160,000, respectively. WLKT Partners contributed an additional $50,000 to Marvel Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $55,000 during 20Y2. 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 revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,260,000, $900,000, and $360,000, respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.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 revenues, expenses, and withdrawals to the individual member equity accounts.
c. Prepare a statement of members' equity for 20Y2.
d. What are the advantages of an income-sharing agreement for the members of this LLC?
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