Dakota Corporation makes custom-order furniture to meet the needs of persons with disabilities. On January 1, Year 2, the company had the following account balances: $85,000 for both cash and common stock. In Year 2, Dakota worked on three jobs. The relevant direct operating costs follow.

	Direct Labor				Direct Materials
Job 1	$	4,400			$	5,400
Job 2		2,300				1,500
Job 3		8,800				4,000
Total	$	15,500			$	10,900

Dakotas predetermined manufacturing overhead rate was $0.40 per direct labor dollar. Actual manufacturing overhead costs amounted to $5,948. Dakota paid cash for all costs. The company completed and delivered Jobs 1 and 2 to customers during the year. Job 3 was incomplete at the end of the year. The company sold Job 1 for $16,800 cash and Job 2 for $7,900 cash. Dakota also paid $3,500 cash for selling and administrative expenses for the year. Dakota uses a just-in-time inventory management system. Consequently, it does not have raw materials inventory. Raw materials purchases are recorded directly in the Work in Process Inventory account. Required

1. Record the preceding events in a horizontal statements model. The first row shows beginning balances.

2. Record the entry to close the amount of underapplied or overapplied overhead for the year to Cost of Goods Sold (in the expense category) in the horizontal financial statements model.

3. Determine the gross margin for the year.

Record the preceding events in a horizontal statements model. The first row shows beginning balances. Record the entry to close the amount of underapplied or overapplied overhead for the year to Cost of Goods Sold (in the expense category) in the horizontal financial statements model. (Enter costs of each job individually. Enter any decreases to account balances with a minus sign.)

Assets Work in Finished Process Goods Retained Cash Manufacturing Overhead Equity Common Stock 85,000 + Net Expense = Income + Earnings Revenue 85,000 + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + + 85,000 + 85,000 +