Job-order costing in a manufacturing company Keeney Corporation makes custom-order furniture to meet the needs of disabled persons. On January 1, 2011, the company had the following account balances: $90,000 for both cash and common stock. In 2011, Keeney worked on three jobs. The relevant direct operating costs follow.

Keeney's predetermined manufacturing overhead rate was $0.40 per direct labor dollar. Actual manufacturing overhead costs amounted to $5,758. Keeney 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 $16,000 cash and Job 2 for $7,800 cash. Keeney also paid $3,000 cash for selling and administrative expenses for the year.
Keeney 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.

Direct Labor Direct Materials $ 4,000 2,800 8,200 Job 1 Job 2 Job 3 $4,500 1,400 3,600 Total $9,500 $15,000