Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $70,000 and $56,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:1. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000.

 

Transcribed Image Text:

a. Determine the division of $148,000 net income for the year. Schedule of Division of Net Income Salary allowance Remaining income Net income Clark Farley $70,000 56,000 Martin Farley, Member Equity Ashley Clark, Member Equity Total 126,000 b. Provide journal entries to close the (1) revenues and expenses and (2) drawing accounts for the two members. For a compound transaction, if an amount box does not require an entry, leave it blank. (1) Revenues 668,000 Expenses (2) Martin Farley, Member Equity Ashley Clark, Member Equity Cash 148,000 56,000 520,000 000 a. Determine the division of $148,000 net income for the year. Schedule of Division of Net Income Salary allowance Remaining income Net income Clark Farley $70,000 56,000 Martin Farley, Member Equity Ashley Clark, Member Equity Total 126,000 b. Provide journal entries to close the (1) revenues and expenses and (2) drawing accounts for the two members. For a compound transaction, if an amount box does not require an entry, leave it blank. (1) Revenues 668,000 Expenses (2) Martin Farley, Member Equity Ashley Clark, Member Equity Cash 148,000 56,000 520,000 000

Answer rating: 100% (QA)

1 2 3 4 a A Salary Allowance R... View the full answer