Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $64,000 and $51,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:2. 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 Farley Clark Salary allowance 19,800 13,200 Remaining income Not incomo Total QO 4
Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $64,000 and $51,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:2. 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 Farley Clark Salary allowance 19,800 13,200 Remaining income Not incomo Total QO 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
$64,000 and $51,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:2. 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 Farley Clark
Salary allowance
19,800 $ 13,200
Remaining income
Net income
Total
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.
(1) Revenues
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