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Statement of LLC Liquidation Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income...

Statement of LLC Liquidation

Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in the ratio of 2:2:1, respectively. The members decide to liquidate the limited liability company. The members' equity prior to liquidation and asset realization on August 1 are as follows:

Lester $27,900
Torres 64,500
Hearst 40,100
Total $132,500

In winding up operations during the month of August, noncash assets with a book value of $174,200 are sold for $216,000, and liabilities of $58,200 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $16,500.

a. Prepare a statement of LLC liquidation. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter "0".

Arcadia Sales, LLC
Statement of LLC Liquidation
For the Period August 1-31



Cash +

Noncash
Assets =


Liabilities +		 Member
Equity
Lester (2/5) +		 Member
Equity
Torres (2/5) +		 Member
Equity
Hearst (1/5)
Balances before realization $ $ $ $ $ $
Sale of assets and division of gain + + + +
Balances after realization $ $ $ $ $ $
Payment of liabilities
Balances after payment of liabilities $ $ $ $ $ $
Distribution of cash to members
Final balances $ $ $ $ $

$

b. Provide the journal entry for the final cash distribution to members. For a compound transaction, if an amount box does not require an entry, leave it blank.

Lester, Member Equity
Torres, Member Equity
Hearst, Member Equity
Cash


c. What is the role of the income- and loss-sharing ratio in liquidating a LLC?

The income- and loss-sharing ratio is only used to on the realization of asset sales. It used for the final distribution.

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Homework Answers

Answer #1

a.

Arcadia Sales, LLC
Statement of LLC Liquidation
For the Period August 1 - 31
Cash Noncash Assets Liabilities Member Equity
Lester (2/5)		 Member Equity
Torres (2/5)		 Member Equity
Hearst (1/5)
Balances before realization 16500 174200 58200 27900 64500 40100
Sale of assets and division of gain 216000 -174200 0 16720 16720 8360
Balances after realization 232500 0 58200 44620 81220 48460
Payment of liabilities -58200 0 -58200 0 0 0
Balances after payment of liabilities 174300 0 0 44620 81220 48460
Distribution of cash to members -174300 0 0 -44620 -81220 -48460
Final balances 0 0 0 0 0 0

b.

Lester, Member Equity 44620
Torres, Member Equity 81220
Hearst, Member Equity 48460
Cash 174300

What is required in c.?  

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