Boulder Mines paid $426,000 for the right to extract ore from a 275,000-ton mine

Question

Boulder Mines paid $426,000 for the right to extract ore from a 275,000-ton mineral deposit In addition to the purchase price. Boulder Mines also paid a $120 filing fee, a $2,100 icense fee to the state of Colorado, and $64,030 for a geologic survey of the property. Because the company purchased the zero residual value when fully depleted. During the first year of production, Boulder Mines removed 40,000 tons of ore, of which it sold 34,000 tons. Requirement rights to the minerals only, it expects the asset to hav 1. dake cuma antries to record (e purchase of the mineral rights,() payment of fes and other costs,(e) depletion for fretyear production, and (l) sles ofore, Round depletion per unit to the closest cent (Record debits first, then credits. Exclude explanations from any journal entries.) production, and (d) sales of ore. Round purchase of the mineral rights.(Do not record the payment of fees and other costs, they ill be recorded in transaction (b)) Journal Date Debit Credit (b) Record the payment of fees and other costs. Journal Date Accounts Debit Credit c) Record the depletion for first- year production. (Round the depletion per ton to the nearest cent, and round the total depletion to the nearest whole number) Journal hoose from any list or enter any number in the input fields and then continue to the next question.

Explanation / Answer

Journal entries: Accounts title and explanations Debit $ Credit $ Mineral rights Dr. 426000       Cash Account 426000 Mineral rights Dr. 66250     Cash Account 66250 (for filing fees, licence fees and geologic survey paid for rights purchased) Depletion expense Dr. 71600      Mineral rights 71600 Note: Cost of Mienral rights 426000 Add: Expense incurred at the time of purcase 66250 Total cost 492250 Divide: Minerals reserves 275000 Depletion per ton 1.79 Production in Year-1 40000 Depletion expense in Year-1 71600

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