Question

Macro Media, LLC has three members: WLKT Partners, Amanda Nelson, and Daily Sentinel Newspaper, LLC. On Jan 1 all three members has equity of $250,000, $50,000, and $140,000 respectively. WLKT partners contributed an additional $50,000 to Macro Media LLC. Amanda Nelson received an annual salary of $88,700. The member's equity accounts are also credited with 10% interest on each members capital balance. Any remaining Income is split 4:3:3 among all three members, net income for the company was $720,000, Amounts equal to the salary and interest allowances were withdrawn by the members.

a- determine the division among all three members

b- prepares the journal entry to close the net income and withdrawals to the individual member equity accounts

c- Prepare a statement of members equity for 2012

d- What are the advantages of an income sharing agreement for this LLC.

Answer 1

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Particulars	WLKT Partners	Amanda Nelson	Daily Sentinel Newspaper LLC	Total
Balances, Janauar 1, 2012	$250,000.00	$50,000.00	$140,000.00	$440,000.00
Add: Capital Additions	$50,000.00			$50,000.00
	$300,000.00	$50,000.00	$140,000.00	$490,000.00
Add: Net Income for the year	$259,920.00	$269,890.00	$190,190.00	$720,000.00

Solution d:

Advantages of an income sharing agreement for this LLC:

• Without income sharing agreement, profit will be shared in equal ratio, further no salary and interest was provided.
• Income sharing agreement clearly define how the income will be distributed, this reduce the dispute among partners.