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Need to know what entries to make when adding a new LLC

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Need to know what...

Need to know what entries to make when adding a new LLC member (California). There are currently 4 members in the LLC. The new member will pay $12,500 to own 7% interest in the LLC. I figured that I would debit cash for $12,500 and credit a Capital Account for the new member. Do I need to make any adjustments to the current members capital accounts? If so, what adjustments should I make? Thank you.

Submitted: 1 month ago.Category: Finance
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Answered in 22 minutes by:
12/28/2017
Financial Professional: Lev, Tax Preparer replied 1 month ago
Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 31,343
Experience: Personal Investment, Tax Preparation
Verified

Dollar values for existing members capital sub-accounts will remain the same - but we need to create additional sub-account for a new member.

Total capital account will increase and percentage owned by existing members will be lowed.

A capital account records the balance of the investments from and distributions to a partner.

You will need to keep separate sub-account for each partner.

So - you are correct - contribution of funds by the partner is recorded as a debit to the cash account and a credit to a separate sub-account for this new partner.

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