Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $59,000 and $47,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:1. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000. a. Determine the division of $148,000 net income for the year. Schedule of Division of Net Income Line Item Description Salary allowance Remaining income Net income Feedback (1) Revenues (2) Farley 59,000 31,500 ✓ 90,500 ✔ ✓ Expenses ✓ Martin Farley, Member Equity Ashley Clark, Member Equity Check My Work a. Set up a column for each partner and a total column. Allocate salary allowances, then distribute the remaining income based on the income sharing agreement. b. Provide journal entries to close the (1) revenues and expenses and (2) drawing accounts for the two members. If an amount box does not require an entry, leave it blank. Martin Farley, Member Equity Ashley Clark, Member Equity Clark 47,000 Martin Farley, Drawing Ashley Clark, Drawing 10,500 ✓ ✓ 57,500 Total 106,000 ✓ 42,000 ✓ ✓ 148,000 ✓ 668,000 ✔ 148,000 X 59,000 0000 47,000✔ 520,000 148,000 X 148,000 X 59,000 ✓ 47,000
Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $59,000 and $47,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:1. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000. a. Determine the division of $148,000 net income for the year. Schedule of Division of Net Income Line Item Description Salary allowance Remaining income Net income Feedback (1) Revenues (2) Farley 59,000 31,500 ✓ 90,500 ✔ ✓ Expenses ✓ Martin Farley, Member Equity Ashley Clark, Member Equity Check My Work a. Set up a column for each partner and a total column. Allocate salary allowances, then distribute the remaining income based on the income sharing agreement. b. Provide journal entries to close the (1) revenues and expenses and (2) drawing accounts for the two members. If an amount box does not require an entry, leave it blank. Martin Farley, Member Equity Ashley Clark, Member Equity Clark 47,000 Martin Farley, Drawing Ashley Clark, Drawing 10,500 ✓ ✓ 57,500 Total 106,000 ✓ 42,000 ✓ ✓ 148,000 ✓ 668,000 ✔ 148,000 X 59,000 0000 47,000✔ 520,000 148,000 X 148,000 X 59,000 ✓ 47,000
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter19: Accounting For Partnerships
Section: Chapter Questions
Problem 3SEB
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Transcribed Image Text:Dividing LLC Income
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $59,000 and $47,000 to each member, respectively. In addition, the operating
agreement specified an income-sharing ratio of 3:1. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000.
a. Determine the division of $148,000 net income for the year.
Schedule of Division of Net Income
Line Item Description
Salary allowance
Remaining income
Net income
Feedback
(1) Revenues
(2)
Farley
59,000
31,500 ✓
90,500 ✔
✓
Expenses
✓
Martin Farley, Member Equity
Ashley Clark, Member Equity
Check My Work
a. Set up a column for each partner and a total column. Allocate salary allowances, then distribute the remaining income based on the income sharing agreement.
b. Provide journal entries to close the (1) revenues and expenses and (2) drawing accounts for the two members. If an amount box does not require an entry, leave it blank.
Martin Farley, Member Equity
Ashley Clark, Member Equity
Clark
47,000
Martin Farley, Drawing
Ashley Clark, Drawing
10,500
✓ ✓
57,500
Total
106,000
✓
42,000 ✓
✓
148,000 ✓
668,000 ✔
148,000 X
59,000
0000
47,000✔
520,000
148,000 X
148,000 X
59,000 ✓
47,000
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