Financial Accounting (5th Edition) (What's New in Accounting)
5th Edition
ISBN: 9780134727790
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 58BP
1.
To determine
Record all of Incorporation OM’s transactions, for the first year.
2.
To determine
Prepare the Company’s income statement for its coal operations for the first year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Colorado Mining paid $564.000 to acquire a mine with 47,000 tons of coal reserves. The financial statements model shown on the last
tab reflects Colorado Mining's financial condition just prior to purchasing the coal reserves. The company extracted 24,675 tons of coal
in year Land 21150 tons in year 2.
Required
a Compute the depletion charge per unit
b-1. Compute the depletion expense for years 1 and 2 in a financial statements.
b-2. Record the acquisition of the coalreserves and the depletion expense for years Fand 2 in a financial statements model.
Complete this question by entering your answers in the tabs below.
Req A
Req B1
Req B2
Compute the depletion charge per unit.
Deple charge per unit
per ton
Reg BTX
A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is
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…
Chapter 8 Solutions
Financial Accounting (5th Edition) (What's New in Accounting)
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - What is depreciation, and why is it used in...Ch. 8 - Prob. 5DQCh. 8 - Which depreciation method would be moot...Ch. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQ
Ch. 8 - Prob. 1SCCh. 8 - Prob. 2SCCh. 8 - How should a capital expenditure for a long-term...Ch. 8 - Which depreciation method usually produces the...Ch. 8 - Prob. 5SCCh. 8 - Prob. 6SCCh. 8 - Prob. 7SCCh. 8 - Prob. 8SCCh. 8 - Prob. 9SCCh. 8 - Prob. 10SCCh. 8 - Prob. 11SCCh. 8 - Prob. 12SCCh. 8 - Prob. 1SECh. 8 - Long-term asset terms (Learning Objective 1) 5-10...Ch. 8 - Prob. 3SECh. 8 - Lump-sum purchase (Learning Objective 2) 5-10 min....Ch. 8 - Errors in accounting for long-term assets...Ch. 8 - Concept of depreciation (Learning Objective 3)...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Prob. 9SECh. 8 - Prob. 10SECh. 8 - Prob. 11SECh. 8 - Prob. 12SECh. 8 - Prob. 13SECh. 8 - Prob. 14SECh. 8 - Prob. 15SECh. 8 - Other long term assets (Learning Objective 8) 5-10...Ch. 8 - Prob. 17SECh. 8 - Prob. 18AECh. 8 - Prob. 19AECh. 8 - Prob. 20AECh. 8 - Prob. 21AECh. 8 - Depreciation methods (Learning Objective 3) 15-20...Ch. 8 - Prob. 23AECh. 8 - Prob. 24AECh. 8 - Prob. 25AECh. 8 - Prob. 26AECh. 8 - Prob. 27AECh. 8 - Prob. 28AECh. 8 - Prob. 29AECh. 8 - Prob. 30AECh. 8 - Prob. 31AECh. 8 - Prob. 32BECh. 8 - Prob. 33BECh. 8 - Prob. 34BECh. 8 - Prob. 35BECh. 8 - Prob. 36BECh. 8 - Prob. 37BECh. 8 - Prob. 38BECh. 8 - Prob. 39BECh. 8 - Prob. 40BECh. 8 - Prob. 41BECh. 8 - Prob. 42BECh. 8 - Prob. 43BECh. 8 - Prob. 44BECh. 8 - Prob. 45BECh. 8 - Long-term asset costs and partial-year...Ch. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 50APCh. 8 - Prob. 51APCh. 8 - Prob. 52APCh. 8 - Prob. 53BPCh. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 55BPCh. 8 - Prob. 56BPCh. 8 - Prob. 57BPCh. 8 - Prob. 58BPCh. 8 - Prob. 59BPCh. 8 - Prob. 1CECh. 8 - Prob. 1CPCh. 8 - Continuing Financial Statement Analysis Problem...Ch. 8 - Prob. 1EIACh. 8 - Prob. 2EIACh. 8 - Financial Analysis Purpose: To help familiarize...Ch. 8 - Prob. 1IACh. 8 - Prob. 1SBACh. 8 - Written Communication A client of yours notified...
Knowledge Booster
Similar questions
- Salter Mining Company purchased the Northern Tier Mine for $21 million cash. The mine wasestimated 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 weremined, 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 SalterMining Company’s balance sheet after the first year of operations. c. Will the entire amount of depletion computed in part a be deducted from revenue in the deter-mination of income for the year? Explain.arrow_forwardMaggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. Ifno salvage value is expected and 2 million tons are mined in the first year, the entry to record depletion will include a O a. Debit to inventory of $1,200,000 O b. Debit to accumulated depletion of $2,000,000 Oc. Credit to accumulated depletion of $2,000,000 Od. Credit to depletion expense of $1,200,000arrow_forwardThe Weber Company purchased a mining site for $510,498 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 82,226 tons will be recovered. During the first year the company extracted 6,000 tons of ore. The depletion expense is a.$46,488.30 b.$45,615.00 c.$37,260.00 d.$33,922.34arrow_forward
- Help me selecting the right answer. Thank youarrow_forwardDepletion: 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 6arrow_forwardDepletion: Calculating and Journalizing Mineral Works Co. acquired a salt mine at a cost of $1,925,000, with no expected salvage value. The estimated number of units available for production from the mine is 3,500,000 tons. a. During the first year, 220,000 tons are mined and sold. b. During the second year, 290,000 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. DATE ACCOUNT TITLE DEBIT CREDIT NO. REF. 1 Year 1 1 2 3 3 4 Year 2 4 5arrow_forward
- Maggie Company expects to extract 20 million tons of coal from a mine that cost $12 million. If no salvage value is expected and 2 million tons are mined in the fırst year, the entry to record depletion will include a: Select one: a. credit to Depletion Expense of $1,200,000. b. The answer does not exist c. debit to Inventory of $1,200,000. d. debit to Accumulated Depletion of $2,000,000. e. credit to Accumulated Depletion of $2,000,000.arrow_forwardHidden Hollow Mining Co. acquired mineral rights for $42,500,000. The mineral deposit is estimated at 50,000,000 tons. During the current year, 11,500,000 tons were mined and sold. a. Determine the depletion rate. If required, round your answer to two decimal places.$fill in the blank 91e68b00e031f88_1 per ton b. Determine the amount of depletion expense for the current year.$fill in the blank 91e68b00e031f88_2 c. Journalize the adjusting entry on December 31 to recognize the depletion expense. If an amount box does not require an entry, leave it blank. Dec. 31 fill in the blank 346c5df8f020fe0_2 fill in the blank 346c5df8f020fe0_3 fill in the blank 346c5df8f020fe0_5 fill in the blank 346c5df8f020fe0_6arrow_forwardA certain mining company has acquired a coal mine for a cost of $4,500,000. No other costs are involved. There is no salvage value. The total coal expected to be extracted from the mine is 35,000 tons. During its first year of operation, the total extraction of coal was 5,700 tons. Using the above information compute:a. the depletion rate per ton of coal extracted.b. the depletion charge of the coal extracted during the first yeararrow_forward
- Castle Company purchased land containing an estimated 2.5 million tons of ore for a cost of $4,400,000. The land without the ore is estimated to be worth $250,000. During its first year of operation, the company mined and sold 375,000 tons of ore. Compute the depletion charge per ton. Compute the depletion expense that Castle should record for the year. You need to show how much per ton in your computations.arrow_forwardA company purchased mining property for $4,875,000 (assume no salvage value) containing an estimated 15,000,000 tons of ore. In Year 1, it mined 689,000 tons of ore and in Year 2, it mined 935,000 tons. 1. What is the depletion rate per ton? -------------------> Calculation: 2. What is the depletion expense for Year 1? ----------> Calculation: 3. What is the depletion expense for Year 2? ----------> Calculation: 4. What is the book value at the end of Year 2? Mining property Less: Accumulated depletion Book Valuearrow_forwardA company purchased mining property for $4,875,000 (assume no salvage value) containing an estimated 15,000,000 tons of ore. In Year 1, it mined 689,000 tons of ore and in Year 2, it mined 935,000 tons. 1. What is the depletion rate per ton? - Calculation: 2. What is the depletion expense for Year 1? ------>arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning