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Tyler Smith had worked in an upholstery shop for 10 years. Last year, Tylers wages were $25,000. Lately, Tyler had been unhappy with the shops owner. Convinced that he could run an upholstery shop that did better work at a lower cost, Tyler decided to go into business for himself during 2022 and opened Classic Upholstery Shop, Inc. He organized his business as a corporation and deposited $50,000 into a business bank account in exchange for shares of common stock.

On January 1, to get the business going, Tyler decided to invest heavily in advertising. He spent $10,000 on advertising aimed at consumers and another $1,000 on advertising aimed at getting work from interior decorators and interior design stores. Tyler also purchased industrial sewing machines costing $5,000 and other tools and equipment costing $15,000. He estimated that the sewing machines can be used for about five years before maintenance costs will be too high and the machines will need to be replaced. The other tools and equipment are not as durable and will have to be replaced in three years. Tyler also purchased a vehicle for $14,000, placing $2,000 down and financing the remaining amount. The loan is in the name of his business and is not a personal loan. The loans balance at the end of the year is 9,600 and interest expense paid was $500. The vehicles useful life is 7 years.

At the end of the first year of business, Tyler had received $102,000 in cash from customers for upholstery work. Tyler was owed another $9,000 from customers who are not required to pay cash but are billed every 30 days.

A review of Tylers checkbook and bank account shows he paid the following expenses in cash (in addition to those mentioned previously) during the first year of business:

1. 1. Upholstery fabric $50,000
   2. Other supplies inventory $10,000
   3. Wagespart-time assistant $8,450
   4. Rent $4,900
   5. Insurance (two-year policy) $3,200
   6. Utilities $1,200
   7. Professional expenses $800
   8. Tylers utility bill for the last month of the year has not arrived. He estimates that the bill will be approximately $750.
   9. Tyler keeps some stock of upholstery fabric in popular colors on hand for customers who do not want to wait for special-order fabric to arrive.
      1. At the end of the year, about $16,000 of the fabric purchased during the year was in his store stock.
      2. In addition, $1,800 in supplies had not been used.

\begin{tabular}{|c|c|c|} \hline & \multicolumn{2}{|c|}{ Adjusted Trial Balance } \\ \hline & \multicolumn{2}{|c|}{12/31/2022} \\ \hline & DR & CR \\ \hline Cash & $37,550.00 & \\ \hline Accounts Receivable & $9,000.00 & \\ \hline Fabric Inventory & $16,000.00 & \\ \hline Supplies Inventory & $1,800.00 & \\ \hline Prepaid Insurance & $1,600.00 & \\ \hline Equipment - sewing machines & $5,000.00 & \\ \hline Accumulateddepreciation-sewingmachines & & 1,000.00 \\ \hline Other equipment & $15,000.00 & \\ \hline Accumulateddepreciation-otherequipment & & 5,000.00 \\ \hline Vehicle & $14,000.00 & \\ \hline Accumulateddepreciation-Vehicle & & 2,000.00 \\ \hline Accounts Payable & & 750.00 \\ \hline Loan Payable & & 9,600.00 \\ \hline Common Stock & & 50,000.00 \\ \hline Fees Earned & & $111,000.00 \\ \hline Wages Expense & $8,450.00 & \\ \hline Rent Expense & $4,900.00 & \\ \hline Utilities Expense & $1,950.00 & \\ \hline Professional Expense & 800.00 & \\ \hline Advertising Expense & $11,000.00 & \\ \hline Fabric Expense & $34,000.00 & \\ \hline Supplies Expense & $8,200.00 & \\ \hline Insurance Expense & $1,600.00 & \\ \hline Depreciation Expense & $8,000.00 & \\ \hline Interest Expense & 500.00 & \\ \hline & & \\ \hline & $179,350.00 & $179,350.00 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline \multicolumn{2}{|c|}{ Classic Upholstery Shop } \\ \hline \multicolumn{2}{|c|}{ Balance Sheet } \\ \hline & December 31, 2022 \\ \hline Assets: & \multicolumn{1}{l|}{} \\ \hline Cash & & \\ \hline Accounts Receivable & & \\ \hline Inventory & & \\ \hline Prepaid Insurance & & \\ \hline Fixed Assets: & & \\ \hline Equipment & & \\ \hline Other Equipment & & \\ \hline Vehicle & & \\ \hline Less: Accumulated Depreciation & & \\ \hline Net Fixed Assets & & \\ \hline & & \\ \hline Total Assets & & \\ \hline & & \\ \hline Liabilities: & & \\ \hline Accounts Payable & & \\ \hline Loan Payable & & \\ \hline Total Liabilities & & \\ \hline & & \\ \hline Stockholder's Equity: & \\ \hline Common Stock & & \\ \hline Retained Earnings & \\ \hline Total Stockholders' Equity & \\ \hline Total Liabilities and Stockholders' Equity & \\ \hline \end{tabular}

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