- Apply sanding sealer. If you are leaving the wood natural, you will want to right to Step 6. If you are going to stain, you should first apply a coat of sanding sealer. Apply a coat, let it soak in for a few minutes and then take one of your rags. Wipe it off. This will keep your stain more even as it soaks into the wood. Sand with your 120 grit paper and clean off the dust.
- Stain your project. There are a few types of stain, but the easiest to use and to clean up is a water-based stain. Most are applied with a natural end paint brush and wiped off with a soft clean rag. Leaving the stain sit a little longer or doing more coats will make you color darker. Try it on an underside to see the shade you like. Follow the manufacturers time on drying before applying the polyurethane.
- Coat with Polyurethane. Apply the polyurethane with a brush. Stay with the grain and do longer strokes. Once it is covered, let it dry and sand with the 220 grit paper. Clean off the dust well and apply again. You can do as many coats as you want to get your desired finish. It's much better to do a few thin coats than one thick one. You'll have a much smoother, clearer finish.
Reference - http://www.ehow.com/how_4473123_refinish-furniture.html