Natural ResourcesThe Hollister Company acquires a silver mine at the cost of $1,300,000 on January 1. Along with the purchase price Hollister pays additional costs associated withdevelopment of $50,000. Hollister expects the mine will have a salvage value of $100,000 once all the silver has been mined. Best estimates are that the mine contains250,000 tons of ore.Requireda. Prepare the entry to record the purchase of the silver mine.b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold.C. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the ore are sold.DescriptionDebitCredita.Purchase of silver mineb.0.To record depletion on silver mine.c. Silver inventory0.To record depletion on silver mine.

Definition: Depletion: It refers to the process of proportionately distributing the cost of the…

Answered: Natural Resources The Hollister Company…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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5. Usula Corporation's subsidiary Pensive oil drills a well with the intention of extracting oil from a known reservoir. It incurs the following costs related to the acquisition of property and development of the site. $280,000 $23,000 Land purchase • Road construction • Drill pad construction $48,000 • Drilling fees Usula Oil estimates that it will incur a site restoration cost of $57,000 once extraction is complete. Usula's geologists estimate that the proven oil reserves that are accessed by the well are 400,000 barrels. How much would the depletion charge be for 270,000 barrels? $192,000
Natural Resources The Hollister Company acquires a silver mine at the cost of $2,100,000 on January 1. Along with the purchase price Hollister pays additional costs associated with development of $50,000, Hollister expects the mine will have a salvage value of $300,000 once all the silver has been mined. Best estimates are that the mine contains 250,000 tons of ore. Required a: Prepare the entry to record the purchase of the silver mine. b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold, c. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the are are sold Description Credit 4 # Purchase of silver mine # = To record depletion on silver mine Siver inventory To record depletion on silver mine Debit
Subject: accounting
2. Mark Company
Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $2,088,450. It estimated it would extract 17,550 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.15 million, $4.35 million, and $3.1 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($15,400), $667,500, and $662,500, respectively. In years 1-3, LCM extracted 18,550 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) (1) Tons of Coal 17,550 (2) Basis $2,088,450 Depletion (2)/(1) Rate $119.00 Year 1 2,400 Tons Extracted per Year Year 2 11,450 Year 3 4,700 c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year? Depletion Expense Year 1 Year 2 $…
Subject: accounting
devu
Acquisition Cost of Long-Lived Asset The following data relate to a firm's purchase of a machine used in the manufacture of its product: Invoice price Applicable sales tax Cash discount taken for prompt payment Freight paid Cost of insurance coverage on machine while in transit Installation costs Testing and adjusting costs Repair of damages to machine caused by the firm's employees Prepaid maintenance contract for first year of machine's use Determine the acquisition cost of the machine. Acquisition Cost = $ $30,000 2,000 400 260 125 3,000 475 750 300
Question Content Area Solare Company acquired mineral rights for $543,400,000. The diamond deposit is estimated at 49,400,000 tons. During the current year, 2,230,000 tons were mined and sold. Question Content Area a. Determine the depletion rate.fill in the blank 1 of 1$ per ton b. Determine the amount of depletion expense for the current year.fill in the blank 1 of 1$ Question Content Area c. Journalize the adjusting entry to recognize the depletion expense. If an amount box does not require an entry, leave it blank. Date Account Debit Credit December 31
Ram.4

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