On January 1, 2021, the general ledger of Parts Unlimited includes the following account balances:

Accounts	Debit		Credit
Cash	$	182,400
Accounts Receivable		32,400
Inventory		57,800
Land		360,000
Equipment		396,500
Accumulated depreciation				$	192,000
Accounts Payable					34,800
Common stock					540,000
Retained Earnings					262,300
Totals	$	1,029,100		$	1,029,100

From January 1 to December 31, the following summary transactions occurred:

1. Purchased inventory on account, $345,800.
2. Sold inventory on account, $645,200. The inventory cost $362,600.
3. Received cash from customers on account, $578,700.
4. Paid cash on account, $348,500.
5. Paid cash for salaries, $114,700, and for utilities, $72,700.

In addition, Parts Unlimited had the following transactions during the year:

April		1		Purchased equipment for $115,000 using a note payable, due in 12 months plus 8% interest. The company also paid cash of $5,200 for freight and $5,800 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 $60,000 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 $52,200. The equipment cost $80,700 and had accumulated depreciation of $57,400 at the beginning of the year. Additional depreciation for 2021 up to the point of the sale is $10,500. (Hint: Total accumulated depreciation equals the amount at the beginning of the year plus the amount recorded for the current year.)
November		15		Several older pieces of equipment were improved by replacing major components at a cost of $74,100. These improvements are expected to enhance the equipment's operating capabilities. [Record this transaction using Alternative 2capitalization of new cost.]

Year-end adjusting entries:

1. Depreciation on the equipment purchased on April 1, 2021, calculated using the straight-line method.
2. Depreciation on the remaining equipment, $41,500.
3. Amortization of the patent purchased on June 30, 2021, using the straight-line method.
4. Accrued interest payable on the note payable.
5. Equipment with an original cost of $87,400 had the following related information at the end of the year: accumulated depreciation of $60,300, expected cash flows of $17,700, and a fair value of $20,800.
6. Accrued income taxes at the end of the year are $32,600.

Using the information from the requirements above, complete the 'Analysis'. (Round "fixed asset turnover ratio" answer to 2 decimal places.)

Analyze how well Parts Unlimited manages its assets:
(a) Calculate the fixed asset turnover ratio for the year, using the total amount of property, plant, and equipment (net of accumulated deprecation). 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? (Hint: For the amount of fixed assets, use the net amount of all tangible long-term assets.)
The fixed asset turnover ratio is:	$1.03
The company is more efficient at generating sales with its fixed assets.	True
(b) Suppose the equipment purchased on April 1, 2021, had been depreciated using the units of production method. At the time of purchase, expected output was 25,000 units, and actual production for 2021 was 3,000 units. Calculate the amount of depreciation expense that would have been recorded and determine the difference in net income and total assets for 2021 (ignoring tax effects).
Units-of-production depreciation:
Depreciation expense under units-of-production method is higher. (True or False)	True
Income and total assets in 2021 would have been	lower by
(c) The transaction on June 30, 2021, shows the company purchased a patent for $60,000 from a third-party marketing company. Suppose the company instead spent $60,000 to internally develop the new packaging technology, which it then patented. Calculate the difference in net income and total assets for 2021 (ignoring tax effects).
Additional expense for 2021
The income and total assets in 2021 would have been higher. (True or False)

General Ledger Account

Cash
No.	Date	Debit	Credit	Balance
				182,400
4	Jan 01	578,700		761,100
5	Jan 01		348,500	412,600
6	Jan 01		187,400	225,200
7	Apr 01		11,000	214,200
8	Jun 30		60,000	154,200
10	Oct 01	52,200		206,400
11	Nov 15		74,100	132,300

Accounts receivable
No.	Date	Debit	Credit	Balance
				32,400
2	Jan 01	645,200		677,600
4	Jan 01		578,700	98,900

Inventory
No.	Date	Debit	Credit	Balance
				57,800
1	Jan 01	345,800		403,600
3	Jan 01		362,600	41,000

Land
No.	Date	Debit	Credit	Balance
				360,000

Equipment
No.	Date	Debit	Credit	Balance
				396,500
7	Apr 01	126,000		522,500
10	Oct 01		80,700	441,800
11	Nov 15	74,100		515,900
16	Dec 31		66,600	449,300

Accumulated depreciation
No.	Date	Debit	Credit	Balance
				192,000
9	Oct 01		10,500	202,500
10	Oct 01	67,900		134,600
12	Dec 31		8,250	142,850
13	Dec 31		41,500	184,350
16	Dec 31	60,300		124,050

Patent
No.	Date	Debit	Credit	Balance
				0
8	Jun 30	60,000		60,000
14	Dec 31		1,500	58,500

Accounts payable
No.	Date	Debit	Credit	Balance
				34,800
1	Jan 01		345,800	380,600
5	Jan 01	348,500		32,100

Interest payable
No.	Date	Debit	Credit	Balance
				0
15	Dec 31		6,900	6,900

Income taxes payable
No.	Date	Debit	Credit	Balance
				0
17	Dec 31		32,600	32,600

Notes payable
No.	Date	Debit	Credit	Balance
				0
7	Apr 01		115,000	115,000

Common stock
No.	Date	Debit	Credit	Balance
				540,000

Retained earnings
No.	Date	Debit	Credit	Balance
				262,300
18	Dec 31		684,600	946,900
19	Dec 31	657,550		289,350

Sales revenue
No.	Date	Debit	Credit	Balance
				0
2	Jan 01		645,200	645,200
18	Dec 31	645,200		0

Cost of goods sold
No.	Date	Debit	Credit	Balance
				0
3	Jan 01	362,600		362,600
19	Dec 31		362,600	0

Depreciation expense
No.	Date	Debit	Credit	Balance
				0
9	Oct 01	10,500		10,500
12	Dec 31	8,250		18,750
13	Dec 31	41,500		60,250
19	Dec 31		60,250	0

Amortization expense
No.	Date	Debit	Credit	Balance
				0
14	Dec 31	1,500		1,500
19	Dec 31		1,500	0

Salaries expense
No.	Date	Debit	Credit	Balance
				0
6	Jan 01	114,700		114,700
19	Dec 31		114,700	0

Utilities expense
No.	Date	Debit	Credit	Balance
				0
6	Jan 01	72,700		72,700
19	Dec 31		72,700	0

Interest expense
No.	Date	Debit	Credit	Balance
				0
15	Dec 31	6,900		6,900
19	Dec 31		6,900	0

Income tax expense
No.	Date	Debit	Credit	Balance
				0
17	Dec 31	32,600		32,600
19	Dec 31		32,600	0

Gain on sale of equipment
No.	Date	Debit	Credit	Balance
				0
10	Oct 01		39,400	39,400
18	Dec 31	39,400		0

Loss on impairment
No.	Date	Debit	Credit	Balance
				0
16	Dec 31	6,300		6,300
19	Dec 31		6,300	0