Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability co
ID: 2564486 • Letter: D
Question
Dividing LLC Income Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $63,000 and $50,000 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 Total Salary allowance C Remaining income Net income ( b. Provide journal entries to cose the (3) revenues and expenses and (2) drawing acceunts for the two members rawing accounts for the two members. For a compound transaction, if an amount box does not require an entry, leave it blank. 2 more Check My Work uses remaining 1241 PMExplanation / Answer
Schedule of division of net income:
Salary allocation:
- Martin Farley 63000
- Ashley Clark 50000
113000
Net remaining income allocated to partners:
- Martin Farley (35000 X 3 /5)
- Ashley Clark (35000 X 2 /5)
21000
14000
Journal entries
1) Dr. Net income 113000 (As calculated above)
Cr. Martin Farley capital account 63000 (As calculated above)
Cr. Ashley Clark capital account 50000 (As calculated above)
(Being distribution of salary of partners)
2) Dr. Net income 35000 (As calculated above)
Cr. Martin Farley capital account 21000 (As calculated above)
Cr. Ashley Clark capital account 14000 (As calculated above)
(Being distribution of remaining net profit to partners in the ration of 3:2)
Members accounts
Martin Farley Capital Account:
Ashley Clark Account:
Particulars Amount Revenue 668000 Expenses 520000 Net income 148000Salary allocation:
- Martin Farley 63000
- Ashley Clark 50000
113000
Remaining income 35000Net remaining income allocated to partners:
- Martin Farley (35000 X 3 /5)
- Ashley Clark (35000 X 2 /5)
21000
14000