Windsor enters into an agreement with Traveler Inc. to lease a car on December 31, 2016. The following information relates to this agreement. 1. The term of the non-cancelable lease is 5 years with no renewal or bargain purchase option. The remaining economic life of the car is 3 years, and it is expected to have no residual value at the end of the lease term.
2. The fair value of the car was $12,840 at commencement of the lease.
3. Annual payments are required to be made on December 31 at the end of each year of the lease, beginning December 31, 2017. The first payment is to be of an amount of $4,753.20, with each payment increasing by a constant rate of 5% from the previous payment (i. e., the second payment will be $4,990.86 and the third and final payment will be $5,240.40).
4. Windsor’ incremental borrowing rate is 8%. The rate implicit in the lease is unknown.
5. Windsor uses straight-line depreciation for all similar cars.
(a) Prepare Windsor’ journal entries for 2016, 2017, and 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 2 decimal places, e. g. 5,275.25.)
Date
Account Titles and Explanation
Debit
Credit
12/31/16
12/31/17
(To record interest expense)
12/31/17
(To record amortization of the right-of-use asset)
12/31/18
(To record interest expense)
12/31/18
(To record amortization of the right-of-use asset)

Amachine purchased three years ago for $720,000 has a current book value using straight-line depreciation of $400,000: its operating expenses are $60,000 per year. a replacement machine would cost $480,000, have a useful life of nine years, and would require $26,000 per year in operating expenses. it has an expected salvage value of $130,000 after nine years. the current disposal value of the old machine is $170,000: if it is kept 9 more years, its residual value would be $20,000. calculate the total costs in keeping the old machine and purchase a new machine. should the old machine be replaced?

In allentown, pennsylvania, in the summer of 2014, the average price of a gallon of gasoline was $3.68long dasha 22-cent increase from the year before. many consumers were upset by the increase. one was quoted in a local newspaper as saying, "it's crazy. the government should step in." source: sam kennedy, "valley feeling pain at the pump," (allentown, pa) morning call, june 21, 2014. suppose the government had stepped in and imposed a price ceiling equal to old price of $3.46 per gallon. a. using the line drawing tool, draw and label the price ceiling. carefully follow the instructions above, and only draw the required object.

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?