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Splish Brothers Timber Inc., a small private company that follows ASPE, owns 9,000 hectares of timberland purchased in 2004 at a cost of $1,700 per hectare. At the time of purchase, the land without the timber was valued at $600 per hectare. In 2005, Splish Brothers built fire lanes and roads, with a physical life of 30 years, at a cost of $84,000 and separately capitalized these costs. Every year, Splish Brothers sprays to prevent disease at a cost of $4,000 per year and spends $10,000 to maintain the fire lanes and roads. During 2006, Splish Brothers selectively logged and sold 550,000 cubic metres of the estimated 2.75 million cubic metres of timber. In 2007, Splish Brothers planted new seedlings to replace the cut trees at a cost of $100,000. Determine the depletion charge and the portion of depletion included in the cost of timber sold in 2006. Depletion charge Provide the journal entries to record the depletion charged to inventory (and subsequently to cost of goods sold) for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round depletion rate to 2 decimal places, e.g. 15.75 and final answer to 0 decimal places, e.g. 1,525.) Account Titles and Explanation Debit Credit (To record depletion charged to inventory)

Splish Brothers Timber Inc., a small private company that follows ASPE, owns 9,000 hectares of timberland purchased in 2004 at a cost of $1,700 per hectare. At the time of purchase, the land without the timber was valued at $600 per hectare. In 2005, Splish Brothers built fire lanes and roads, with a physical life of 30 years, at a cost of $84,000 and separately capitalized these costs. Every year, Splish Brothers sprays to prevent disease at a cost of $4,000 per year and spends $10,000 to maintain the fire lanes and roads. During 2006, Splish Brothers selectively logged and sold 550,000 cubic metres of the estimated 2.75 million cubic metres of timber. In 2007, Splish Brothers planted new seedlings to replace the cut trees at a cost of $100,000. Determine the depletion charge and the portion of depletion included in the cost of timber sold in 2006. Depletion charge Provide the journal entries to record the depletion charged to inventory (and subsequently to cost of goods sold) for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round depletion rate to 2 decimal places, e.g. 15.75 and final answer to 0 decimal places, e.g. 1,525.) Account Titles and Explanation Debit Credit (To record depletion charged to inventory)

FINANCIAL ACCOUNTING
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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Splish Brothers has not logged since 2006. Assume that Splish Brothers logged 940,000 cubic metres of timber in 2017, of which 60% was sold in 2017 and the remainder sold in 2018. The timber cruiser (the appraiser) had estimated a total resource of 8 million cubic metres. Determine the cost of timber sold that relates to the depletion for 2017 and 2018. Cost of timber sold related to depletion Provide the journal entries to account for the cost of timber produced in 2017 and subsequently sold in 2017 and 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit (To record timber produced) (To record cost of timber sold in 2017) (To record cost of timber sold in 2018) Credit Prepare the necessary journal entry to show how would Rachel account for the maintenance costs of the fire lanes and roads and the spraying of the timberland. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit
Transcribed Image Text:Splish Brothers has not logged since 2006. Assume that Splish Brothers logged 940,000 cubic metres of timber in 2017, of which 60% was sold in 2017 and the remainder sold in 2018. The timber cruiser (the appraiser) had estimated a total resource of 8 million cubic metres. Determine the cost of timber sold that relates to the depletion for 2017 and 2018. Cost of timber sold related to depletion Provide the journal entries to account for the cost of timber produced in 2017 and subsequently sold in 2017 and 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit (To record timber produced) (To record cost of timber sold in 2017) (To record cost of timber sold in 2018) Credit Prepare the necessary journal entry to show how would Rachel account for the maintenance costs of the fire lanes and roads and the spraying of the timberland. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit
Exercise 11-13 Splish Brothers Timber Inc., a small private company that follows ASPE, owns 9,000 hectares of timberland purchased in 2004 at a cost of $1,700 per hectare. At the time of purchase, the land without the timber was valued at $600 per hectare. In 2005, Splish Brothers built fire lanes and roads, with a physical life of 30 years, at a cost of $84,000 and separately capitalized these costs. Every year, Splish Brothers sprays to prevent disease at a cost of $4,000 per year and spends $10,000 to maintain the fire lanes and roads. During 2006, Splish Brothers selectively logged and sold 550,000 cubic metres of the estimated 2.75 million cubic metres of timber. In 2007, Splish Brothers planted new seedlings to replace the cut trees at a cost of $100,000. Determine the depletion charge and the portion of depletion included in the cost of timber sold in 2006. Depletion charge $ Provide the journal entries to record the depletion charged to inventory (and subsequently to cost of goods sold) for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round depletion rate to 2 decimal places, e.g. 15.75 and final answer to 0 decimal places, e.g. 1,525.) Account Titles and Explanation (To record depletion charged to inventory) (To record cost of goods sold) Debit Credit
Transcribed Image Text:Exercise 11-13 Splish Brothers Timber Inc., a small private company that follows ASPE, owns 9,000 hectares of timberland purchased in 2004 at a cost of $1,700 per hectare. At the time of purchase, the land without the timber was valued at $600 per hectare. In 2005, Splish Brothers built fire lanes and roads, with a physical life of 30 years, at a cost of $84,000 and separately capitalized these costs. Every year, Splish Brothers sprays to prevent disease at a cost of $4,000 per year and spends $10,000 to maintain the fire lanes and roads. During 2006, Splish Brothers selectively logged and sold 550,000 cubic metres of the estimated 2.75 million cubic metres of timber. In 2007, Splish Brothers planted new seedlings to replace the cut trees at a cost of $100,000. Determine the depletion charge and the portion of depletion included in the cost of timber sold in 2006. Depletion charge $ Provide the journal entries to record the depletion charged to inventory (and subsequently to cost of goods sold) for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round depletion rate to 2 decimal places, e.g. 15.75 and final answer to 0 decimal places, e.g. 1,525.) Account Titles and Explanation (To record depletion charged to inventory) (To record cost of goods sold) Debit Credit
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