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Umnica [9.8K]
2 years ago
9

At the beginning of 2021, Terra Lumber Company purchased a timber tract from Boise Cantor for $2,950,000. After the timber is cl

eared, the land will have a residual value of $670,000. Roads to enable logging operations were constructed and completed on March 30, 2021. The cost of the roads, which have no residual value and no alternative use after the tract is cleared, was $228,000. During 2021, Terra logged 570,000 of the estimated 5.7 million board feet of timber. Required: Calculate the 2021 depletion of the timber tract and depreciation of the logging roads assuming the units-of-production method is used for both assets
Business
1 answer:
Contact [7]2 years ago
5 0

Answer:

depletion of the timber tract = $228,000 and

depreciation of the logging roads = $22,800

Explanation:

Timber tract

Depletion rate = (Cost - Residual Value) ÷ Estimated units

                        = ($2,950,000 - $670,000) ÷ 5,700,000

                        = $0.40

Depletion expense = Units used x Depletion rate

                                = 570,000 x $0.40

                                = $228,000

Logging Roads

Depreciation rate  = (Cost - Residual Value) ÷ Estimated units

                               = ($228,000 - $0) ÷ 5,700,000

                               = $0.04

Depreciation expense = Units used x Depreciation rate

                                     = 570,000 x $0.04

                                     = $22,800

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7 0
2 years ago
arasota Company obtained land by issuing 3,380 shares of its $12 par value common stock. The land was recently appraised at $146
likoan [24]

Answer:

Dr Land $146,440

Cr Common stock (3,380 shares×$12 par value) $40,560

Cr Paid in Capital in excess of Par common stock $105,880

Explanation:

Arasota Company Journal entry

Dr Land $146,440

Cr Common stock (3,380 shares×$12 par value) $40,560

Cr Paid in Capital in excess of Par common stock $105,880

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2 years ago
Payton, Inc.'s charter authorized 100,000 shares of stock with a par value of $1 per share. Payton issues 100 shares at a market
hoa [83]

Answer:

Common stock and $100

Explanation:

The journal entry is shown below:

Cash Dr $500   (100 shares × $5)

     To Common stock $100  (100 shares × $1)

     To Additional paid in capital in excess of par value - common stock  (100 shares × $4)

(Being the issuance of the common stock is recorded)

For recording this we debited the cash as it increased the assets and credited the common stock and additional paid in capital as it increased the stockholder equity    

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3 years ago
Refer to the data for Pennewell Publishing Inc. (PP). Assume that PP is considering changing from its original capital structure
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Answer:

$57.69 per share

Explanation:

The computation of the  stock price per share immediately after issuing the debt but prior to the repurchase is shown below

Price per share = Value of equity ÷ number of Shares

where,

Value of equity is

= Value of operations + T-bills value - Debt value

= $576,923 + $259,615 - $259,615

= $576,923

And, the number of shares is 10,000 shares

So, the price per share is

= $576,923 ÷ 10,000 shares

= $57.69 per share

We simply applied the above formula

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3 years ago
Economies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) __________ percen
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Answer: A greater and fall

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Economies of scale are said to exist when inputs are increased by some percentage and output increases by a(n) greater percentage, causing unit costs to fall. This is referred to as the cost advantages obtained by companies when production becomes well organized. One reason for economies of scale is specialization of labor and of machinery. This brings a great input to production because Labour must have mastered his/her field coupled with the help of machinery which will eventually result into a great turn out.

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3 years ago
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