Caldwell Mining Co. acquired mineral rights for $228,224,000. The mineral deposi
ID: 2455324 • Letter: C
Question
Caldwell Mining Co. acquired mineral rights for $228,224,000. The mineral deposit is estimated at 356,600,000 tons. During the current year, 44,234,000 tons were mined and sold.
Journalize the adjusting entry on December 31 to recognize the depletion expense. Refer to the Chart of Accounts for exact wording of account titles.
A. Determine the depletion rate. per ton
B. Determine the amount of depletion expense for the current year.
JOURNAL
1
Adjusting Entries
2
3
Required: A. Determine the depletion rate. B. Determine the amount of depletion expense for the current year. C.Journalize the adjusting entry on December 31 to recognize the depletion expense. Refer to the Chart of Accounts for exact wording of account titles.
A. Determine the depletion rate. per ton
B. Determine the amount of depletion expense for the current year.
JOURNAL
DATE DESCRIPTION POST. REF. DEBIT CREDIT1
Adjusting Entries
2
3
Explanation / Answer
A. Depletion rate = $228,224,000 / 356,600,000 tons = $0.64 per ton
B. Depletion expense for the current year = 44,234,000 tons * $0.64 = $28,309,760
C. Journal Entry
DATE
DESCRIPTION
DEBIT
CREDIT
December 31
Depletion expense
$28,309,760
Accumulated depletion
$28,309,760
DATE
DESCRIPTION
DEBIT
CREDIT
December 31
Depletion expense
$28,309,760
Accumulated depletion
$28,309,760
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