Lester, Torres, and Hearst are members of Arcadia Sales, LLC, sharing income and losses in...
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Accounting
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
A business form consisting of one or more persons or entities filing an operating agreement with a state to conduct business with limited liability to the owners, yet treated as a partnership for tax purposes.
. The members equity prior to liquidation and asset realization
The sale of assets when a partnership or LLC is being liquidated.
on August 1, 2016, are as follows:
Lester
$ 48,550
Torres
57,430
Hearst
29,680
Total
$135,660
In winding up operations during the month of August, noncash assets with a book value of $154,940 are sold for $166,430, and liabilities of $47,780 are satisfied. Prior to realization, Arcadia Sales has a cash balance of $28,500.
Required:
a.
Prepare a statement of LLC liquidation.
b.
Provide the journal entry for the final cash distribution to members. Refer to the Chart of Accounts for exact wording of account titles.
c.
What is the role of the income- and loss-sharing ratio in liquidating a LLC?
Answer & Explanation
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