PlayTime Inc. manufactures parts for computers. The Trial Balance section of its worksheet and other year-end data follow.

PlayTime Inc. Trial Balance December 31, 20X1
ACCOUNT NAME	DEBIT		CREDIT
Cash	59,000
Accounts Receivable	75,900
Allowance for Doubtful Accounts			1,100
Raw Materials Inventory	34,000
Work in Process Inventory	49,000
Finished Goods Inventory	51,000
Prepaid Insurance	6,900
Factory Supplies	4,900
Land	59,000
Factory Building	290,000
Accumulated DepreciationFactory Building			20,000
Factory Machines	145,000
Accumulated DepreciationFactory Machines			20,000
Office Furniture and Equipment	29,000
Accumulated DepreciationOffice Furniture and Equipment			5,800
Accounts Payable			85,000
Salaries and Wages Payable
Income Tax Payable
Social Security Tax Payable
Medicare Tax Payable
Employee Income Tax Payable
Common Stock			109,000
Retained Earnings			468,200
Sales			1,004,500
Sales Returns and Allowances	6,400
Materials Purchases	261,000
Purchases Returns and Allowances			2,900
Freight In	10,900
Direct Labor	190,000
Indirect Labor	29,000
Payroll Tax ExpenseFactory	29,600
UtilitiesFactory	8,900
Repairs and MaintenanceFactory	3,300
Indirect Materials and Supplies	2,900
DepreciationFactory Building
DepreciationFactory Machines
InsuranceFactory
Property TaxesFactory	6,900
Sales Salaries Expense	94,000
Payroll Taxes ExpenseSales	9,400
Delivery Expense	5,900
Advertising Expense	5,900
Uncollectible Accounts Expense
Miscellaneous Selling Expense	7,400
Officers Salaries Expense	154,000
Office Salaries Expense	49,000
Payroll Taxes ExpenseAdministrative	19,400
Depreciation ExpenseOffice Furniture and Equipment
Other Administrative Expenses	5,900
Income Tax Expense	13,000
Totals	1,716,500		1,716,500

YEAR-END DATA

1. Physical inventories taken on December 31, 20X1, show $30,000 of raw materials on hand and $44,000 of finished goods on hand. The work in process inventory is estimated to be $47,000 on the same date.
2. It is estimated that 2 percent of the outstanding accounts receivable might not be collectible.
3. Of the prepaid insurance, $5,000 covering the factory building and equipment has expired.
4. A physical inventory discloses $4,310 of factory supplies on hand at the end of the period.
5. Depreciation expense for the year is as follows: $10,000 on the factory building, $10,000 on the factory machines, and $2,900 on the office furniture. (Make a compound entry.)
6. Payroll accruals at the end of the period include $3,400 of direct labor and $600 of indirect labor.
7. Payroll taxes on accrued wages are social security, 6.2 percent, and Medicare tax, 1.45 percent.
8. The income tax rate is 25 percent. Include adjustments in the order given on the trial balance.

Required:

1. Prepare a 12-column manufacturing worksheet for the year ended December 31, 20X1.
2. Using the data given, enter the adjustments. Then complete the worksheet.
3. Prepare a statement of cost of goods manufactured.
4. Prepare an income statement.
5. Prepare a statement of retained earnings. Additional data needed is as follows:
6. Balance of Retained Earnings on January 1 was $577,200.
7. Dividends declared and paid on common stock during the year amounted to $109,000.
8. There were no changes in any other stockholders' equity accounts.
9. Prepare a balance sheet as of December 31, 20X1. There are 109,000 shares of $1 par common stock outstanding, out of the 109,000 shares authorized.
10. Record the adjusting entries shown on the worksheet in general journal form on December 31, 20X1.
11. Prepare the closing entries for all accounts involved in the cost of goods manufactured.
12. Prepare the closing entries for all revenue and expense accounts and the Manufacturing Summary account.
13. Prepare the closing entry to close the Income Summary account.
14. Journalize the reversing entries. Date the entries January 1, 20X2.

Analyze: Assume that the industry standard for direct labor costs is 20 percent of cost of goods manufactured. How is PlayTime Inc. performing as compared to this industry standard?