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 Debit Credit Purchase of silver mine = To record depletion on silver mine Siver inventory # To record depletion on silver mine

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 Debit Credit Purchase of silver mine = To record depletion on silver mine Siver inventory # To record depletion on silver mine

Name: Natural ResourcesThe Hollister Company acquires a silver mine at the
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Description: Natural ResourcesThe 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, Hollisterexpects the mine will have a salvage

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

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

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