12. Suppose two college friends, Larry Page, and Sergey Brin, created a Limited

Question

12. Suppose two college friends, Larry Page, and Sergey Brin, created a Limited Liability Company (LLC). They were equal (50%) members for S30.000 of a capital contribution each. Then assume a new member wished to join, Jerry Yang, and he was willing to pay $50,000 to be an equal (33%) member. Record the journal entry for the first two owners/members making their capital contributions, and then the journal entry for the newest member joining the LLC. 13. Suppose the LLC in Problem #12, then sold one of its buildings for Si 0,000,000. The building had accumulated depreciation of $3,000,000, and the purchase price was $15,000,000, a few years ago. Please provide the journal entry for the loss on the building, for each member. FY1: These loss amounts will go on each of their K-1 tax forms.

Explanation / Answer

Only 1st question (Q 12) is solved

Journal
Cash Dr $ 60,000
Larry Page's Capital $ 30,000
Sergey Brin's Capital $ 30,000
(Capital contributions made by partners)

New Combined capital after Jerry Yang's admission (60000+50000) = $ 110,000
Jerry Yang's Share = (110000/3) = $ 36,667
Excess Capital Contributed by Jerry Yang = 50000-36667 = $ 13,333
To be enjoyed by Larry and Sergey in equal ratio

Journal
Cash Dr $ 50,000
Jerry Yang's Capital $ 36,667
  Larry Page's Capital (13333/2) $ 6,667
Sergey Brin's Capital (13333/2) $ 6,666
(Admission of Jerry Yang into LLP)

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