Exploit Media, LLC, has three members: WACS Partners, Elyse O'Reilly, and Encounter Newspaper, LLC. On January 1, 20Y2, the three members had equity of $295,000, $75,000, and $175,000, respectively. WACS Partners contributed an additional $70,000 to Exploit, Media, LLC, on June 1, 20Y2. Elyse O'Reilly received an annual salary allowance of $171,100 during 20Y2. The members equity accounts are also credited with 15% 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 Exploit Media, LLC, for 20Y2 were $599,238, $99,238 and $500,000 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 Amounts equal to the salary and interest allowances were withdrawn by the members.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.

Schedule of Division of Income

	WACS Partners	Elyse O'Reilly	Encounter Newspaper, LLC	Total
Salary allowance
Interest allowance
Remaining income (4:3:3)
Net income

b. Prepare the journal entries to close the (1) revenues, expenses, and (2) withdrawals to the individual member equity accounts. If an amount box does not require an entry, leave it blank.

(1)	Elyse O'Reilly, Member EquityEncounter Newspaper, LLC, Member EquityRevenuesWACS Partners, DrawingWACS Partners, Member Equity
	CashElyse O'Reilly, DrawingExpensesRevenuesWACS Partners, Drawing
	Elyse O'Reilly, DrawingEncounter Newspaper, LLC, DrawingRevenuesWACS Partners, DrawingWACS Partners, Member Equity
	CashElyse O'Reilly, Member EquityEncounter Newspaper, LLC, DrawingRevenuesWACS Partners, Drawing
	CashElyse O'Reilly, DrawingEncounter Newspaper, LLC, Member EquityRevenuesWACS Partners, Drawing
(2)	Elyse O'Reilly, DrawingEncounter Newspaper, LLC, DrawingRevenuesWACS Partners, DrawingWACS Partners, Member Equity
	CashElyse O'Reilly, Member EquityEncounter Newspaper, LLC, DrawingRevenuesWACS Partners, Drawing
	Encounter Newspaper, LLC, DrawingEncounter Newspaper, LLC, Member EquityInterest ExpenseRevenuesWACS Partners, Drawing
	CashElyse O'Reilly, Member EquitySalary ExpenseWACS Partners, DrawingWACS Partners, Member Equity
	CashElyse O'Reilly, DrawingElyse O'Reilly, Member EquityEncounter Newspaper, LLC, Member EquityWACS Partners, Member Equity
	CashElyse O'Reilly, Member EquityEncounter Newspaper, LLC, DrawingRevenuesWACS Partners, Member Equity	- Select -	- Select -

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

Exploit Media, LLC Statement of Members' Equity For the Year Ended December 31, 20Y2

	WACS Partners	Elyse O'Reilly	Encounter 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 or would not)

be credited with an equal proportion of the total earnings, or one-third each. Separate contributions

(can or cannot)

be acknowledged in the income-sharing formula.