a search Print tem Dividing LiC Income Martin Farley and Ash

a search Print tem Dividing LiC Income Martin Farley and Ashley Clark formed a limited lablity company with an operating agreement that provided a salary alowance of $59,000 and $47,000 to each member mpectively. Inaddtion, the operating agreenet speoned aninconrtharng ratio of 3: 2. The bo merben-hdrew nts eur tother saary alowancn Revenues were 1668,000 and expenses were $520,000, for a net income of $148,000 a. Determine the division of S148,000 inome for the ye Schedule of Division of Net Inceme Farley ClarkTetal Salany allowance Renaining income compound nsaction, if an the monten mer . b. Provide journal emnes to dese the C1) reverun and expenses and(2) drewing accounts an entry, leave it blank work saved 3

Solution

Net income distribution workings:

Farly share= 42000*3/5= 25200

Clark share= 42000*2/5= 16800

c. If the net income of the llc were less than the sum of the salary allowances, capital account of members would still be credited with their salary allowances. The difference between the net income and total salary allowance would be allocated to each partner as deficit, according to the profit and loss sharing ratio

a.		Farley	Clark	Total
Salary allowance		59,000	47,000	1,06,000
Remaining income	25,200	16,800	42,000
Net income		84,200	63,800	1,48,000
b.
1
Income summary		1,48,000
Farley capital			84,200
Clark capital			63,800
2
Farley capital		59,000
Clark capital		47,000
Farley drawings			59,000
Clark drawings			47,000