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Agata [3.3K]
3 years ago
11

Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total $101,000. After extraction has

occurred, Crane must restore the property (estimated fair value of the obligation is $80,800), after which it can be sold for $161,600. Crane estimates that 4,040 tons of coal can be extracted. If 707 tons are extracted the first year, prepare the journal entry to record depletion.
Business
1 answer:
Svet_ta [14]3 years ago
8 0

Answer:

The journal entry to record depletion is  :

Debit : Depletion Expense $74,235

Credit : Accumulated Depletion $74,235

Explanation:

<em>Depletion Expense = Depletion rate × units extracted during the year</em>

where,

<em>Depletion rate = (Cost - Salvage Value) ÷ Estimated total units</em>

Therefore,

Depletion rate = ($404,000 + $101,000 + $80,800 - $161,600) ÷ 4,040 tons

                        = $ 105 per ton

Therefore,

Depletion Expense = $ 105 per ton × 707 tons

                                = $74,235

<u>Journal Entry :</u>

Debit : Depletion Expense $74,235

Credit : Accumulated Depletion $74,235

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A hamburger factory produces 40,000 hamburgers each week. The equipment used costs $5,000 andwill remain productive for 4 years.
bezimeni [28]

Answer:

This question is incomplete. However, I found the prompt to be as follows;

"What is the productivity measure of “units of output per dollar of input” averaged over the four-year period? "

Explanation:

To solve this question, find productivity;

Productivity in this case is total hamburgers produced divided by the total labor cost plus total equipment cost.

Productivity = # of hamburgers *52 weeks * 4 years / (total labor cost + equipment cost)

Productivity= 40,000(52)(4)/ {9,500(4) + 5000}

= 193.5 hamburgers/dollar of input

Therefore, the factory would produce about 194 burgers per dollar of input.

5 0
3 years ago
When the price level decreases, _____. rev: 06_12_2018 Multiple Choice the demand for money falls and the interest rate falls ho
beks73 [17]

Answer:

The demand for money falls and the interest rate falls.

Explanation:

Price level can be described as the evaluation of the amount in which goods and services are sold in the market. A change in the price level can greatly affect the demand of a customer either positively or negatively.

A decrease in the price level enables a customer to purchase more products and at the same time save some amount of money, this results in the reduction of interest rates.

When the price level reduces, individuals will need less amount of money to buy the same quantity and type of product.

6 0
3 years ago
LUVFINANCE, Inc. is estimating its WACC. It is operating at its optimal capital structure. Its outstanding bonds have a 12 perce
11111nata11111 [884]

Answer:

9.72%

Explanation:

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Par-value = -1000

Coupon rate = 6%

Coupon PMT = -60

Value of bond = 1152

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Semi-annual Yield = 5.00%

Annual Yield = 10%

Tax rate = 40%

After tax cost of debt = 10*(1-0.4)= 6%: Add: Flotation cost (5%) = 11%

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Cost of equity = 9.36%

Particulars  Value per    No of        Market   Weight  Cost of     Product

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Bonds             1162       100000     116200000   0.15784   11          1.736213

P. stock           120        1000000  120000000  0.16299   10         1.62999

Equity              100        5000000 <u>500000000</u> <u>0.6792</u>   9.36       <u>6.35697</u>

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So, the WACC of the firm is 9.72%

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