
a.
Ascertain the amount of depletion expense that would be recognized on 2018 income statement for each of the two reserves.
a.

Explanation of Solution
Depletion:
Depletion is a concept which is same as
Silver mine – Depletion:
2018:
Timber – Depletion:
2018:
Working note 1:
Calculate the rate of silver ore per ton:
Working note 2:
Calculate the rate per board feet of timber:
b.
Ascertain the amount of depletion expense that would be recognized on 2019 income statement for each of the two reserves.
b.

Explanation of Solution
Ascertain the amount of depletion expense that would be recognized on 2019 income statement for each of the two reserves as follows:
Silver mine – Depletion:
2019:
Timber – Depletion:
2019:
Gold Mine - Depletion:
2019:
Oil reserves - Depletion:
2019:
Working note 3:
Calculate the rate of gold mine per ton:
Working note 4:
Calculate the rate of oil per barrel:
c.
Prepare the portion of the
c.

Explanation of Solution
Prepare the portion of the balance sheet that reports natural resources as follows:
Company P | |
Partial Balance Sheet | |
For the year ended December 31, 2019 | |
Natural Resources | Amount ($) |
Silver Min (W.N 5) | 990,000 |
Timber (W.N 6) | 320,000 |
Gold Mine (W.N 7) | 2,484,000 |
Oil Reserves (W.N 8) | 1,050,000 |
Total Natural Resources | 4,844,000 |
Land | 100,000 |
Total | 4,944,000 |
Table (1)
Working notes 5:
Calculate the Book value of silver mine:
Working notes 6:
Calculate the Book value of Timber:
Working notes 7:
Calculate the Book value of Gold mine:
Working notes 8:
Calculate the book value of Oil Reserves:
Want to see more full solutions like this?
Chapter 6 Solutions
SURVEY OF ACCOUNTING(LL)>CUSTOM PKG.<
- Maxwell Corp., which began business at the start of the current year, had the following data: The company planned and actually produced 50,000 units. It sold 47,000 units at a price of $18 per unit. The production costs included a variable cost of $6 per unit and total fixed costs of $300,000. Selling and administrative costs consisted of a variable cost of $2 per unit and fixed costs of $40,000. What is the gross margin that the company would disclose on an absorption-costing income statement?arrow_forwardI need this question for correct answer general accountingarrow_forwardPresented below is financial information for two different companiesarrow_forward
- Correct option? General accounting questionarrow_forwardHow much did the owner withdraw of this financial accounting question?arrow_forwardSales commissions are $6,000 when 1,500 units are sold and $12,000 when 3,000 units are sold. Using the high-low method, what is the variable portion of sales salaries and commissions?arrow_forward
- On January 1, 2015, a new business was started with an initial investment of $12,000 in cash and $8,500 in equipment. During the year, the owner withdrew $3,500. When preparing the Statement of Owner’s Equity, the final balance was recorded as $22,500. Based on this information, what was the net income or loss for the year? A. $5,500 net loss B. $3,500 net income C. $3,500 net loss D. $5,500 net incomearrow_forwardWhat is the correct solution? Please given answer step by step for general accounting questionarrow_forwardGreenway Inc. reported net sales of $400,000 for the year. During the year, accounts receivable increased by $12,000. Calculate the total amount of cash collected from customers during the year.arrow_forward
- College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
