1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Softa [21]
3 years ago
14

Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine cost

ing $213,500, which will be abandoned when the ore is completely mined. Montana mines and sells 166,200 tons of ore during the year. Prepare the year-end entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine’s depletion.
Business
1 answer:
Paraphin [41]3 years ago
4 0

Answer:

Ore deposit depletion and Mining machinery depreciation Journal entries

Dr Depletion charge (Ore deposits) 405,528

Cr Accumulated depreciation 405,528

Dr Depletion charge (Ore deposits) 23,268

Cr Accumulated depreciation 23,268

Explanation:

Preparation of the year-end entries to record both the ore deposit depletion and the mining machinery depreciation of Montana Mining Co

Depletion of natural resources can be defined as the way in which the cost of natural resources is apportioned upto the period when it will be utilized which is why they are shown at cost in balance sheet.

The entry is to record depreciation charged on ore deposit depletion. Therefore To record this entry we have to debit depletion charges, and credit accumulated depreciation

Dr Depletion charge (Ore deposits) 405,528

Cr Accumulated depreciation 405,528

Computation of depletion cost per unit:

The depletion cost per unit can be calculated by dividing the net cost of the ore with the total units of capacity :

Depletion/units = Cost - Salvage/ Total unit of capacity

$3,721,000/1,525,000 tons

=$2.44

Hence, depletion per unit is $2.44.

Computation depletion amount on ore deposit:

The depletion amount on ore deposit can be calculated by multiplying the cost per depletion unit with the number of units utilized:

Depletion =Cost/Unit ×Units Utilized

$2.44×166,200 tones

=$405,528

Hence, depletion expenses on ore deposit amounts to $405,528.

The pass entry to record depreciation charged on mining machine :

Dr Depletion charge (Ore deposits) 23,268

Cr Accumulated depreciation 23,268

Computation of depreciation cost per unit:

The depletion cost per unit can be calculated by dividing the net cost of the ore with the total units of capacity :

Depletion/units = Cost - Salvage/ Total unit of capacity

$213,500/1,525,000 tons

=$0.14

Hence, depreciation per unit is $0.14.

Computation of depreciation amount on ore deposit:

The depletion amount on ore deposit can be calculated by multiplying the cost per depletion unit with the number of units utilized:

Depletion =Cost/Unit ×Units Utilized

$0.14×166,200 tones

=$23,268

Therefore the depreciation expenses on ore deposit amounts to $23,268

You might be interested in
A producer is someone who _____________. A. Makes a commodity available for sA producer is someone who _____________. A. Makes a
Mekhanik [1.2K]
A producer is someone who m<span>akes a commodity available for sale or exchange.</span>
5 0
2 years ago
Which strategy are you using when you only read the title section headings and captions?
Andru [333]

Answer:

Skimming

Explanation:

7 0
2 years ago
Read 2 more answers
A decade after world war i ended, a significant event occurred that caused consumer sales resistance, corporate budget cutting a
natta225 [31]
The Great Depression
6 0
3 years ago
Government regulations help balance negative externalities such as: Multiple Choice No smoking rules enforced to mitigate the ef
amm1812

Government regulations help balance negative externalities such as no smoking rules enforced to mitigate the effects of second-hand smoke.

<h3>What is negative externality?</h3>

Negative externality is when the activities of producers or consumers negatively affect third parties not involved in production or consumption activities.

For example, smoking affects those who are not smoking. They are affected by the second-hand smoke. To prevent this, no smoking rules can be enforced.

To learn more about externalities, please check: brainly.com/question/26266710

4 0
1 year ago
Amanda is trying to decide whether to get a job after graduation or to spend another year in school to get her master's degree.
Alenkinab [10]

Answer:

36,000

Explanation:

5 0
3 years ago
Other questions:
  • The step in designing a customer value dash–driven marketing strategy in which a company divides a market into distinct groups o
    14·1 answer
  • Brianna and Jess live in Taxland, which only has one tax, an income tax. Both Brianna and Jess pay $1,000 in taxes each year but
    14·1 answer
  • If Congress ends an investment tax credit that used to subsidize domestic investment, how would this affect the market for loana
    8·1 answer
  • The ____ phase of the SDLC includes four main activities: requirements modeling, data and process modeling, object modeling, and
    10·1 answer
  • Fox Corp. failed to accrue warranty costs of $150,000 in its December 31, 20x2, financial statements. In addition, a $130,000 ch
    10·1 answer
  • Paper Corporation adopts a plan of reorganization and exchanges 1,000 shares of its voting stock and $50,000 in cash for Chase C
    11·1 answer
  • Ellen Carson’s sales for 5 months were $26,908, $28,386, $28,730, $27,290, and $29,009. What must be her sales next month if she
    12·1 answer
  • Please help meeee!!!!!
    5·1 answer
  • There are a handful of common mistakes people make when trying to
    11·1 answer
  • What remarketing audiences cannot be defined by default?.
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!