Question

Need help! Depletion and amortization

ALT-DEPLETION AND AMORTIZATION TOTAL SCOR There are 5 problems in this set. Choose aBumber between 1 and S: ーー LINE DATE GENERAL JOURNAL CREDIT GRADE Date 1/17 Marzano Corporation issued 1,000,000 shares of $1,00 par common tock for $1.00 per share 1/17 Marzano purchaseda patent frem another commpany. The cost was $48,000 paid in cash. The patent has an estimated life of 10 rs with no salvage value 5/17 Marzano purchased an iron mine, paying cash of $400,000. The mine is expected to produce 100,000 tons of iron ore 231/17 Adi: Record straight line amortization on the Pate for 2017 (partial year) 2/31/17 Adj: Record depletion on the Iree Mine foe 2017 based en extraction of 10,000 13 14 15 16 17 tons of iron ore 19 20 TRIAL BALANCE CASH IRON MINE ACCUM DEPLETION-IRON MINE PATENT COMMON STOCK PATENT AMORTIZATION EXPENSE DEPLETION EXPENSE DEBIT CREDIT

Answer 1

Answers

• Journal entries, as asked

Date	General Journal	Debit	Credit
01-Jan-17	Cash	$1,000,000
	Common Stock		$1,000,000
01-Apr-17	Patent	$48,000
	Cash		$48,000
05-May-17	Iron Mine	$400,000
	Cash		$400,000
31-Dec-17	Patent Amortisation Expense	$3,600
	Patent [Note: Patent has been credited in place of ‘Accumulated Amortisation’ because no such account was mentioned in your list of account given in Trial Balance]		$3,600
	(48000/10 years) x 9 months/12 months
31-Dec-17	Depletion expense	$40,000
	Accumulated Depletion Iron Mine		$40,000
	(10000 ton depletion = ($400000/100,000 expected tons) x 10000 tonns)

• Trial Balance, [using only the list of accounts made available]

Trial Balance	Debit	Credit
Cash	$552,000
Iron Mine	$400,000
Accumulated Depletion Iron Mine		$40,000
Patent	$44,400
Common Stock		$1,000,000
Patent Amortisation expense	$3,600
Depletion expense	$40,000
TOTAL	$1,040,000	$1,040,000