Marks corporation has two operating departments, drilling and grinding, and an office. the three categories of office expenses are allocated to the two departments using different allocation bases. the following information is available for the current period:
office expenses total allocation basis
salaries $ 30,000 number of employees
depreciation 20,000 cost of goods sold
advertising 40,000 net sales
item drilling grinding total
number of employees 1,000 1,500 2,500
net sales $ 325,000 $ 475,000 $ 800,000
cost of goods sold $ 75,000 $ 125,000 $ 200,000
a. the amount of salaries that should be allocated to grinding for the current period is:
multiple choice:
1. $30,000.
2. $18,000.
3. $15,000.
4. $10,000.
5. $12,500.

On january 1, 2018, wetick optometrists leased diagnostic equipment from southern corp. which had purchased the equipment at a cost of $2,256,342. the lease agreement specifies six annual payments of $490,000 beginning january 1, 2018, the beginning of the lease, and at each december 31 thereafter through 2022. the six-year lease term ending december 31, 2023 (a year after the final payment), is equal to the estimated useful life of the equipment. the contract specifies that lease payments for each year will increase on the basis of the increase in the consumer price index for the year just ended. thus, the first payment will be $490,000, and the second and subsequent payments might be different. the cpi at the beginning of the lease is 120. southern routinely acquires diagnostic equipment for lease to other firms. the interest rate in these financing arrangements is 12%. (fv of $1, pv of $1, fva of $1, pva of $1, fvad of $1 and pvad of $1) prepare the appropriate journal entries for wetick and southern to record the lease at its beginning.