Jim and Marie Sunderland have held jobs in a variety of businesses since they have been together. Jim has been a sales representative manager for a pharmaceutical company. Marie has been a legal assistant at a law firm. They both wanted to always own their own business. They have decided to open a jewelry store here in Virginia Beach, Virginia. They will call the jewelry store Heavenly Hocks Enterprises $($HHE$).$ They have been saving up for years to do this and want to branch out on their own now. Here is financial information on the jewelry store as they want your help because you just finished your MBA.

On January $1,$ HHE issued no par common stock to the Sunderland$$s for $$525,000.$ Early in January, Jim signed a one year lease and secured a commercial space for $$18,000$ for HHE. Then the business purchased store fixtures for $$51,000.$ Then the business purchased a vast amount of different types of jewelry. They bought watches, stones, necklaces, bracelets, etc. The total inventory costs was $$240,000.$ Sales were pretty good so a few months later the business purchased additional inventory on account of $$243,000.$ Before the year ended HRE paid $$153,000$ of this accounts payable. During the year, HHE sold $2,800$ pieces of various jewelry and the average sale was $$325.$ Before the year ended the company collected on $95\%$ of this sales amount. The costs of goods sold for the year totaled $$290,000$ and the year$-$end inventory amount was $$193,000.$

The HHE employed three employees and did not pay any overtime throughout the year. The total payroll for the year was $$82,000$ but HHE still owes the employees $$5,000$ at year end. At the end of the year, HHE has paid in income tax of $$17,000$ so there is no reason to have an income tax payable account. The HHE believed they had a rewarding year as they started their own jewelry business. The HHE sacrificed a lot during this first year but did need some money to live on so they took dividends of $$38,000$ from HHE. The HHE do not know that much about accounting so they asked a friend for advice on how to account for the use of the store fixtures. They want the store fixtures depreciated over $5$ years using the straight$-$line depreciation method with zero residual value.