In addition, Parts Unlimited had the following transactions during the year: April 1 Purchased equipment for $105,000 using a note payable, due in 12 months plus 6% interest. The company also paid cash of $4,200 for freight and $4,800 for installation and testing of the equipment. The equipment has an estimated residual value of $16,000 and a ten-year service life. June 30 Purchased a patent for $50,000 from a third-party marketing company related to the packaging of the company's products. The patent has a 20-year useful life, after which it is expected to have no value. October 1 Sold equipment for $41,200. The equipment cost $70,700 and had accumulated depreciation of $47,400 at the beginning of the year. Additional depreciation for 2018 up to the point of the sale is $9,500. November 15 Several older pieces of equipment were improved by replacing major components at a cost of $64,100. These improvements are expected to enhance the equipment's operating capabilities. [Record this transaction using Alternative 2 - capitalization of new cost.] Year-end adjusting entries: a. Depreciation on the equipment purchased on April 1, 2018, calculated using the straight-line method. b. Depreciation on the remaining equipment, $31,500. c. Amortization of the patent purchased on June 30, 2018, using the straight-line method. d. Accrued interest payable on the note payable. e. Equipment with an original cost of $76,400 had the following related information at the end of the year: accumulated depreciation of $48,300, expected cash flows of $25,700, and a fair value of $15,800. f. Accrued income taxes at the end of the year are $22,600. Requirement Requirement General Journal General General Ledger Geage Trial Balance Income Statement Balance Sheet Analysis Record each of the transactions listed above in the 'General Journal' tab (these are shown as items 1-13) assuming a perpetual inventory system. Review the 'General Ledger' and the 'Trial Balance' tabs to see the effect of the transactions on the account balances. 2. Record adjusting entries on December 31. In the 'General Journal' tab (these are shown as items 14-17). 3. Review the adjusted 'Trial Balance' as of December 31, 2018, in the 'Trial Balance' tab. 4. Prepare a multiple-step income statement for the period ended December 31, 2018, in the 'Income Statement' tab. 5. Prepare a classified balance sheet as of December 31, 2018, in the 'Balance Sheet' tab. 6. Record the closing entries in the 'General Journal' tab (these are shown as items 18-20). 7. Using the information from the requirements above, complete the 'Analysis' tab. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Analysis Using the information from the requirements above, complete the 'Analysis'. (Round final answers to two decimal places.) Analyze how well Parts Unlimited manages its assets: (a) Calculate the fixed asset turnover ratio for the year, using all long-term assets. If the industry average fixed asset turnover is 0.75, is the company more or less efficient at generating sales with its fixed assets than other companies in the same industry? The fixed asset turnover ratio is: The company is more efficient at generating sales with its fixed assets than other companies in the same industry. (b) Suppose the equipment purchased on April 1, 2018, had been depreciated using the units of production method. At the time of purchase, expected output was 20,000 units, and actual production for 2018 was 2,000 units. Calculate the amount of depreciation expense that would have been recorded and determine the difference in income and total assets for 2018 (ignoring tax effects). Units-of-production depreciation: Depreciation expense under units-of-production method is higher. (True or False) Income and total assets in 2018 would have been (c) The transaction on June 30, 2018, shows the company purchased a patent for $50,000 from a third-party marketing company. Suppose the company instead spent $50,000 to internally develop the new packaging technology, which it then patented. Calculate the difference in income and total assets for 2018 (ignoring tax effects). Difference in income and total assets for 2018 The income and total assets in 2018 would have been higher. (True or False)