Rundle 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 $2,$ Rundle worked on three jobs. The relevant direct operating costs follow.

Direct Labor Direct Materials

Job $1$ $ $5,000$ $ $4,900$

Job $23,0001,600$

Job $38,5004,300$

Total $ $16,500$ $ $10,800$

Rundle$$s predetermined manufacturing overhead rate was $$0\mathrm{.}40$ per direct labor dollar. Actual manufacturing overhead costs amounted to $$6,354.$ Rundle paid cash for all costs. The company completed and delivered Jobs $1$ and $2$ to customers during the year. Job $3$ was incomplete at the end of the year. The company sold Job $1$ for $$16,400$ cash and Job $2$ for $$8,200$ cash. Rundle also paid $$3,400$ cash for selling and administrative expenses for the year.

Rundle 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.Rundle 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 $2,$ Rundle worked on three jobs. The relevant direct operating costs follow.

Direct Labor Direct Materials

Job $1$ $ $5,000$ $ $4,900$

Job $23,0001,600$

Job $38,5004,300$

Total $ $16,500$ $ $10,800$

Rundle$$s predetermined manufacturing overhead rate was $$0\mathrm{.}40$ per direct labor dollar. Actual manufacturing overhead costs amounted to $$6,354.$ Rundle paid cash for all costs. The company completed and delivered Jobs $1$ and $2$ to customers during the year. Job $3$ was incomplete at the end of the year. The company sold Job $1$ for $$16,400$ cash and Job $2$ for $$8,200$ cash. Rundle also paid $$3,400$ cash for selling and administrative expenses for the year.

Rundle 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.

Answer rating: 100% (QA)

Answer Horizontal Statements Model Cash Common Stock Work in Process Cost of Goods Sold Sales Sellin... View the full answer