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

Accounts	Debit			Credit
Cash	$	176,400
Accounts Receivable		26,400
Inventory		51,800
Land		354,000
Equipment		380,500
Accumulated depreciation				$	186,000
Accounts Payable					28,800
Common stock					534,000
Retained Earnings					240,300
Totals	$	989,100		$	989,100

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

1. Purchased inventory on account, $339,800.
2. Sold inventory on account, $621,200. The inventory cost $356,600.
3. Received cash from customers on account, $572,700.
4. Paid cash on account, $342,500.
5. Paid cash for salaries, $108,700, and for utilities, $66,700.

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

April		1		Purchased equipment for $109,000 using a note payable, due in 12 months plus 8% interest. The company also paid cash of $4,600 for freight and $5,200 for installation and testing of the equipment. The equipment has an estimated residual value of $16,800 and a ten-year service life.
June		30		Purchased a patent for $54,000 from a third-party marketing company related to the packaging of the companys products. The patent has a 20-year useful life, after which it is expected to have no value.
October		1		Sold equipment for $45,600. The equipment cost $74,700 and had accumulated depreciation of $51,400 at the beginning of the year. Additional depreciation for 2021 up to the point of the sale is $9,900. (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 $68,100. These improvements are expected to enhance the equipments 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, $35,500.
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 $80,800 had the following related information at the end of the year: accumulated depreciation of $51,500, expected cash flows of $29,700, and a fair value of $17,800.
6. Accrued income taxes at the end of the year are $26,600.

Balance Sheets

Income Statements

Analysis

Prepare a classified balance sheet as of December 31, 2021. Choose the appropriate accounts to complete the company's balance sheet. The unadjusted, adjusted, or post-closing balances will appear for each account, based on your selection. Adjusted Parts Unlimited Balance Sheet December 31, 2021 Assets Liabilities Cash Accounts receivable Inventory 144,900 Accounts payable 74,900 Interest payable 35,000 Income taxes payable 0 Notes payable 26,100 6,540 26,600 109,000 0 0 254,800 Total liabilities 168,240 Stockholders' equity Total current assets Noncurrent assets: Land Equipment Accumulated depreciation Patent Common stock Retained earnings 354,000 492,700 (189,250) 52,650 534,000 262,660 0 0 796,660 964,900 0 Total stockholders' equity Total liabilities and stockholders' equity Total assets $ 964,900 $ Unadjusted Parts Unlimited Balance Sheet December 31, 2021 Assets Liabilities Cash Accounts receivable Inventory 26,100 0 144,900 74,900 35,000 0 0 254,800 Accounts payable Interest payable Income taxes payable Notes payable 0 109,000 0 Total liabilities 135,100 Stockholders' equity Total current assets Noncurrent assets: Land Equipment Accumulated depreciation Patent Common stock Retained earnings 354,000 492,700 (134,600) 54,000 534,000 351,800 0 0 Total stockholders' equity Total liabilities and stockholders' equity 885,800 $ 1,020,900 Total assets $ 1,020,900 $ 621,200 (356,600) 264,600 Unadjusted Parts Unlimited Income Statement For the year ended December 31, 2021 Sales revenue Cost of goods sold Gross profit Operating expenses Salaries expense 108,700 Utilities expense 66,700 Depreciation expense 9,900 Amortization expense 0 Loss on impairment 0 0 Total operating expenses $ 185,300 79,300 32,200 111,500 0 Gain on sale of equipment Operating income Interest expense Income before taxes Income tax expense Net income 111,500 0 111,500 Adjusted Parts Unlimited Income Statement For the year ended December 31, 2021 Sales revenue Cost of goods sold Gross profit Operating expenses: Salaries expense 108,700 Utilities expense 66,700 Depreciation expense 53,050 Amortization expense 1,350 Loss on impairment 11,500 621,200 (356,600) 264,600 $ 0 Total operating expenses 241,300 23,300 32,200 55,500 6,540 48,960 26,600 22,360 Gain on sale of equipment Operating income Interest expense Income before taxes Income tax expense Net income 1 $ 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: $0.87 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 20,000 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) Income and total assets in 2021 would have been (c) The transaction on June 30, 2021, shows the company purchased a patent for $54,000 from a third-party marketing company. Suppose the company instead spent $54,000 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)