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\mathrm{.}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\mathrm{.}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.$\backslash$table$[[$Assets$,=,$Equity,Revenue,$-,$Expense,$=,\backslash$table$[[$Net$],[$Income$]]],[$Cash$,+,\backslash$table$[[$Work in$],[$Process$]],+,\backslash$table$[[$Finished$],[$Goods$]],+,\backslash$table$[[$Manufacturing$],[$Overhead$]],=,\backslash$table$[[$Common$],[$Stock$]],+,\backslash$table$[[$Retained$],[$Earnings$]]],[86,000,+,,+,,+,,=,86,000,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,=,],[,+,,+,,+,,=,,+,,,-,,$