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Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $240,000, $60,000, and $145,000, respectively. WLKT Partners contributed an additional $60,000 to Marvel, Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $139,200 during 20Y2. The members equity accounts are also credited with 12% interest on each member's January 1 capital balance. Any remaining income is to be shared in the ratio of 4:3:3 among the three members. The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $909,661, $549,661 and $360,000 respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.

a. Determine the division of income among the three members. If an amount box does not require an entry, leave it blank.

WLKT MADIS OBS TOTAL

Salary allowance	$ $ $ $
Interest allowance	$ $ $ $
Remaining income (4:3:3)	$ $ $ $
Net income	$ $ $ $

b. Prepare the journal entries to close the (1) net income and (2) withdrawals to the individual member equity accounts. For a compound entry, if an amount box does not require an entry, leave it blank.

(1)
_________ ____ ____ _________ ____ ____ _________ ____ ____
_________ ____ ____
_________ ____ ____
_________ ____ ____
(2)
________ ____ ____
________ ____ ____
________ ____ ____
________ ____ ____
________ ____ ____

________ _____ _____

c. Prepare a statement of members' equity for 20Y2. If an amount box does not require an entry, leave it blank.

Marvel Media, LLC
Statement of Members' Equity
For the Year Ended December 31, 20Y2
	WLKT Partners	Madison Sanders	Observer Newspaper, LLC	Total
Balances, January 1, 20Y2	$	$	$	$
Capital additions
	$	$	$	$
Net income for the year
	$	$	$	$
Member withdrawals
Balances, December 31, 20Y2	$	$	$	$

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

Without an income-sharing agreement, each member (WOULD/WOULD NOT) be credited with an equal proportion of the total earnings, or one-third each. Separate contributions (CAN/CANNOT) be acknowledged in the income-sharing formula.

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