Tyler Gilligan and Matt Melnyk, two college friends, decided to set up a snow removal business called Sandhill Snow Removal Services. At the inception of the partnership, Tyler invested $4,000 cash and Matt invested $11,000 cash. Once formed, the partnership purchased equipment and a vehicle. Tyler estimates that the equipment purchased for $2,000 and the vehicle purchased for $10,000 have five-year useful lives, with no residual value. He used the straight-line method to calculate depreciation expense. At the end of the first year of business, Tyler, who was studying accounting, provided the following information: SANDHILL SNOW REMOVAL SERVICES Income Statement Year ended December 31, 2021 Service revenue $49,230 Expenses Supplies expense $5,090 Depreciation expense 2,400 Salaries expense 30,520 38,010 Profit $11,220 Additional information: 1. Salaries expense is $19,340 and $11,180 cash that was paid to Tyler and Matt, respectively, during the year. revenues were collected in cash. 3. All supplies were paid for in cash. At the end of the year, there were no supplies on hand. 4. There is $16,620 in the bank account at December 31, 2021. Your answer is correct. Prepare a journal entry to correct the errors, if any, on the income statement. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 T. Gilligan, Drawings 19340 M. Melnyk, Drawings 11180 Salaries Expense 30520 (To correct error.) e Textbook and Media Assistance Used Your answer is partially correct. Calculate the correct profit and the amount to be allocated to each partner. Correct profit $ 41740 T. Gilligan M. Melnyk Allocation of profit $ 11130.67 $ 30609.33 e Textbook and Media Prepare a statement of partners' equity for the year ended December 31, 2021. (List items that increase partner's equity first.) SANDHILL SNOW REMOVAL SERVICES Statement of Partners' Equity Year Ended December 31, 2021 T. Gilligan M. Melnyk Total Capital, Jan. 1 $ 0 $ 0 $ 0 Add Profit/(Loss) 11130.67 30609.33 41740 Investments 4000 11000 15000 15130.67 41609.33 56740 Less Drawings 19340 i 11180 i 30520 Capital, Dec. 31 $ -4209.33 $ 30429.33 $ 26220 e Textbook and Media Assistance Used Prepare a balance sheet at December 31, 2021. (List Current Assets in order of liquidity.) SANDHILL SNOW REMOVAL SERVICES Balance Sheet December 31, 2021 Assets Current Assets Cash $ 16620 Property, Plant, and Equipment Equipment 2000 Less : Accumulated Depreciation-Equipment 400 1600 Vehicles 10000 Less : Accumulated Depreciation-Vehicles 2000 8000 Total Property, Plant and Equipment 9600 Total Current Assets $ 26220 Partners' Equity Partners' Equity M. Melnyk, Capital $ -4209.33 T. Gilligan, Capital 30429.33 Total Partners' Equity $ 26220
