Salter Mining Company purchased the Northern Tier Mine for $21 million cash. The mine was estimated to contain 2.5 million tons of ore and to have a residual value of $1 million. During the first year of mining operations at the Northern Tier Mine, 50,000 tons of ore were mined, of which 40,000 tons were sold. a. Prepare a journal entry to record depletion during the year. b. Show how the Northern Tier Mine, and its accumulated depletion, would appear in Salter Mining Company's balance sheet after the first year of operations. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Show how the Northern Tier Mine, and its accumulated depletion, would appear in Salter Mining Company's balance sheet after the first year of operations. (Amounts to be deducted should be indicated by a minus sign) Property, plant, & equipment Accumulated depletion Mining property: Northern Tier Mine Salter Mining Company Balance Sheet (Partial) + (400,000) 20,600,000 $ 20.200,000

Salter Mining Company purchased the Northern Tier Mine for $21 million cash. The mine was estimated to contain 2.5 million tons of ore and to have a residual value of $1 million. During the first year of mining operations at the Northern Tier Mine, 50,000 tons of ore were mined, of which 40,000 tons were sold. a. Prepare a journal entry to record depletion during the year. b. Show how the Northern Tier Mine, and its accumulated depletion, would appear in Salter Mining Company's balance sheet after the first year of operations. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Show how the Northern Tier Mine, and its accumulated depletion, would appear in Salter Mining Company's balance sheet after the first year of operations. (Amounts to be deducted should be indicated by a minus sign) Property, plant, & equipment Accumulated depletion Mining property: Northern Tier Mine Salter Mining Company Balance Sheet (Partial) + (400,000) 20,600,000 $ 20.200,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The Weber Company purchased a mining site for $573,259 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 94,508 tons will be recovered. During the first year the company extracted 4,359 tons of ore. The depletion expense is a.$51,961.60 b.$23,966.29 c.$26,459.13 d.$53,643.00
On April 1, Year 1, Fossil Energy Company purchased an oil producing well at a cash cost of $10,620,000. It is estimated that the oil well contains 820,000 barrels of oil, of which only 720,000 can be profitably extracted. By December 31, Year 1, 36,000 barrels of oil were produced and sold. What is depletion expense for Year 1 on this well? (Do not round intermediate calculations.):
7. Copper Mines, Inc (CMI) . purchased property for the purpose of extracting copper ore. CMl paid $3,500,000 for the property plus $100,000 closing costs. CMl estimates it will be able to extract 800,000 tons of copper ore from the property over the next 10 years. The actual number of tons of copper ore extracted during the next ten years are as follows: 95,000 tons each in years 1,2,3; 80,000 tons each of years 4,5,6&7; and 75,000 tons each of years 8,9,& 10. It is believed that after 10 years the extractable ore will have been removed and the land will be useful for cattle grazing with an estimated value of $200,000. What is the amount of expense related to the ore extraction to be recognized for year 8? a) b) c) d) e) 318,750 330,000 340,000 350,000 360,000
The Likert Company is a coal company based in West Virginia. The company recently purchased a new coal truck for $120,000. The truck had an expected useful life of 200,000 miles and an expected salvage value of $4,000. Calculate the depreciation expense using the units-of-production method assuming the truck travelled 30,000 miles on company business during the year.
Solare Company acquired mineral rights for $287,200,000. The diamond deposit is estimated at 35,900,000 tons. During the current year, 3,660,000 tons were mined and sold. a. Determine the depletion rate.$fill in the blank 5df5b004305d067_1 per ton b. Determine the amount of depletion expense for the current year.$fill in the blank 5df5b004305d067_2 c. Journalize the adjusting entry to recognize the depletion expense. If an amount box does not require an entry, leave it blank. Dec. 31 fill in the blank 0ae001fa5fd7fc8_2 fill in the blank 0ae001fa5fd7fc8_3 fill in the blank 0ae001fa5fd7fc8_5 fill in the blank 0ae001fa5fd7fc8_6
12. On July 23 of the current year, Dakota Mining Company pays $7,398,720 for land estimated to contain 8,808,000 tons of recoverable ore. It installs and pays for machinery costing $968,880 on July 25. The company removes and sells 451,000 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined. Required:Prepare entries to record the following.(a) The purchase of the land.(b) The cost and installation of machinery.(c) The first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.(d) The first five months' depreciation on the machinery.
Last Chance Mine (LCM) purchased a coal deposit for $1,654,350. It estimated it would extract 13,450 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.35 million, $6.25 million, and $5.2 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 ($16,400), $705,000, and $577,500, respectively. In years 1–3, LCM extracted 14,450 tons of coal as follows: (1) Tons of Coal (2) Basis Depletion (2)/(1) Rate Tons Extracted per Year Year 1 Year 2 Year 3 13,450 $1,654,350 $123.00 2,550 7,450 4,450 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)?
Hidden Hollow Mining Co. acquired mineral rights for $69,000,000. The mineral deposit is estimated at 60,000,000 tons. During the current year, 13,200,000 tons were mined and sold. a. Determine the depletion rate. If required, round your answer to two decimal places. Sfill in the blank d39a0a00ffc1f93_1 per ton
Calculate the amortization and depletion for each transaction. A gold garment production company acquired the rights to a mine for $520,000,000. In the mine, it is estimated that there are 150,000,000 tons of gold. A quantity of 50,000,000 tons was sold in the year.Calculate the depletion rate and the depletion expense for the year.You must provide the steps of how you arrived at the result.
Dow Deep Mining Co acquired mineral rights for $56,000,000. The mineral deposit is estimated at 70,000,000 tons. During the current year, 18,200,000 tons were mined an a. Determine the depletion rate. It required, round your answer to two decina aces A) Depletion rate per ton.
Torge Company bought a machine for $66,800 cash. The estimated useful life was five years, and the estimated residual value was $5,600. Assume that the estimated useful life in productive units is 153,000. Units actually produced were 40,600 in year 1 and 45,900 in year 2. Required: 1. Determine the appropriate amounts to complete the following schedule. Method of Depreciation Straight-line Units-of-production Double-declining-balance Depreciation Expense for Year 1 Year 2 Book Value at the End of Year 11 Year 2
Depletion: Calculating and Journalizing Mineral Works Co. acquired a salt mine at a cost of $1,700,000, with no expected salvage value. The estimated number of units available for production from the mine is 3,400,000 tons. a. During the first year, 200,000 tons are mined and sold. b. During the second year, 600,000 tons are mined and sold. Required: 1. Calculate the amount of depletion expense for both years. Year 1 Year 2 2. Prepare general journal entries for depletion expense. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 1 Year 1 2 3 3 4 Year 2 4 5 6 6