Lugar Corporation makes custom-order furniture to meet the needs of persons with disabilities. On January 1, 2018, the company had the following account balances:$37,800 for both cash and common stock. In 2018, Lugar worked on three jobs. The relevant direct operating costs follow:

	Direct Labor				Direct Materials
Job 1	$	3,000			$	2,000
Job 2		1,400				700
Job 3		4,100				1,800
Total	$	8,500			$	4,500

Lugars predetermined manufacturing overhead rate was $0.50 per direct labor dollar. Actual manufacturing overhead costs amounted to $4,200. Lugar 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 $9,250 cash and Job 2 for $4,930 cash. Lugar also paid $2,000 cash for selling and administrative expenses for the year.

Lugar 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

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.

Determine the gross margin for the year.