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Gibson Corporation makes custom - order furniture to meet the needs of persons with disabilities. On January 1 , Year 2 , the company had

Gibson 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: $86,000 for both cash and common stock. In Year 2, Gibson worked on three jobs. The relevant
direct operating costs follow.
Gibson's predetermined manufacturing overhead rate was $0.40 per direct labor dollar. Actual manufacturing overhead costs
amounted to $5,680. Gibson 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 $16,700 cash and Job 2 for $8,500 cash. Gibson also paid
$3,600 cash for selling and administrative expenses for the year.
Gibson 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
a. Record the preceding events in a horizontal statements model. The first row shows beginning balances.
b. 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.
c. Determine the gross margin for the year.Gibson 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: $86,000 for both cash and common stock. In Year 2, Gibson worked on three jobs. The relevant
direct operating costs follow.
Gibson's predetermined manufacturing overhead rate was $0.40 per direct labor dollar. Actual manufacturing overhead costs
amounted to $5,680. Gibson 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 $16,700 cash and Job 2 for $8,500 cash. Gibson also paid
$3,600 cash for selling and administrative expenses for the year.
Gibson 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
a. Record the preceding events in a horizontal statements model. The first row shows beginning balances.
b. 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.
c. Determine the gross margin for the year.\table[[Assets,=,Equity,Revenue,-,Expense,=,\table[[Net],[Income]]],[Cash,+,\table[[Work in],[Process]],+,\table[[Finished],[Goods]],+,\table[[Manufacturing],[Overhead]],=,\table[[Common],[Stock]],+,\table[[Retained],[Earnings]]],[86,000,+,,+,,+,,=,86,000,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,
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