Exercise $12-6$A $($Algo$)$ Job$-$order costing in a manufacturing company LO $12-2$

Stuart 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: $$88,000$ for both cash and common stock. In Year $2,$ Stuart worked on three jobs. The relevant direct

operating costs follow.

Stuart's predetermined manufacturing overhead rate was $$0\mathrm{.}40$ per direct labor dollar. Actual manufacturing overhead costs amounted

to $$5,672.$ Stuart 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 $$16,500$ cash and Job $2$ for $$8,500$ cash. Stuart also paid $$3,100$ cash

for selling and administrative expenses for the year.

Stuart 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.