Perez Corporation makes custom-order furniture to meet the needs of persons with disabilities. On January 1, 2018, the company had the following account balances: $89,000 for both cash and common stock. In 2018, Perez worked on three jobs. The relevant direct operating costs follow:

	Direct Labor				Direct Materials
Job 1	$	4,700			$	5,300
Job 2		2,700				1,600
Job 3		8,800				4,400
Total	$	16,200			$	11,300

Perezs predetermined manufacturing overhead rate was $.40 per direct labor dollar. Actual manufacturing overhead costs amounted to $6,224. Perez 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 $16,200 cash and Job 2 for $8,400 cash. Perez also paid $3,200 cash for selling and administrative expenses for the year.

Perez 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.

Kecora tne precea ing events in a norizontal Statements moael. I ne rst row snows Deginning Dalances. (nter costs JOD InqIViaually.nter decreases to account balances with a minus sign.) 5 0 Assets Equity Work in Process Finished Goods Manufacturing Common 5 Retained Earnings Cash RevenueE Expense Net Income Stock 89,000+ Overhead 89,000 + 89,000-+ 0 089,000+ 0 0