In 2020 Julian opened a nursery dedicated to edible fruit trees called Darth Melon (DM). Julian operates DM as a sole proprietorship. Below is a list of the 2022 financial transactions that will affect Julian and his business. a) During 2022 DM collected $350,000 in cash sales for the year. b) During 2022 Julian determined that DM would be unable to collect $9,200 of their beginning-year receivables, so he wrote off these bad accounts. He also made $225,000 in new credit sales for the year, of which he estimates that 5% will be uncollectible. c) At the beginning of August Julian purchased a patent for a new hydroponic grow bed. The patent cost him $55,000, but he expects that the production of this new grow bed will bring DM huge profits in the future. The patent expires in 2032. d) One of Julian's customers was so excited by his new patent, that in December they placed an advance order for 5 grow beds. The grow beds cost $150 each, DM will be manufacturing and filling this order in May of 2023. e) During 2022 DM had $167,000 in business expenses for the year including: A total of $60,000 for inventory o $78,000 was paid in March, for the following year of rent on his warehouse facility (March 2022-February 2023) o Total utilities of $17,000 for the year o In November they paid a $1,500 fine for building code violations In January DM paid $5,000 for a year of advertising services o On November 1, DM purchased a 12-month insurance policy that covers its business property through September 30 of next year. The policy costs $5,000. o DM hired Julian's wife this year as a part-time sales rep in the store front. He pays his wife $20,000 this year, even though his competitors pay their sales reps only $10,000 for each year for similar work. o $5,000 miscellaneous (tax deductible) business expenses f) Every year Julian travels to a different fruit tree farm to network and get training for his business. This year he went to South Natick, Massachusetts in September. He was working and learning at the farm for four days and three nights. After that he spent one night and one day in Boston, visiting a friend from college and sightseeing. He paid $450 for his roundtrip flight, $150 per night for lodging, $40 per day for meals (from restaurants), and $90 per day for his rental car. g) Julian received IRS approval to switch from the cash method of accounting to the accrual method, effective 1/1/22. At the end of 2021 DM had $2,200 in accounts receivable and $900 in accounts payable.