II. Problem
The following occurred for SmartMart in 2025.
1/2 Purchased inventory from KiGoods on credit for $5,000. The shipping for the transaction was $100, and the freight term was FOB shipping point.
3/15 Received $500 cash in advance from its customer ZParka.
4/22 Sold $10,000 of inventory to XWare for $70,000 on credit.
5/5 Customer XWare returned defective goods. The sales price of the goods was $2,000, and the cost was $300.
6/17 Acquired 2,000 of its shares at $60 per share.
7/7 Delivered service to its customer ZParka relating to the 3/15 transaction.
8/31 Has a payroll of $8,000 entirely subject to Social Security taxes (8%), income tax withholding of $1,500, union dues of $700 deducted, payable on 9/1.
10/13 Sold 1,000 shares purchased on 10/13 at $50 per share. The balance for Share Premium-Treasury was $15,000.
11/9 Spent $3,000 on research and $8,000 on development of new manufacturing processes. Of the $8,000 in development costs, $3,500 was incurred prior to technological feasibility and $4,500 was incurred after technological feasibility was demonstrated.