Question

16. EX.09-19.BLANKSHEET.ALGO (Algorithmic) Depletion entries Instructions Alaska Mining Co. acquired mineral nights for 30, a mining Co. acquired mineral rights for $38,150,000. The mineral deposit is estimated at 21,800,000 tons. During Required: a. Determine the amount of depletion expense for the current year. D. Joumalize the adjusting entry on December 31 to recognize the depletion expense. Refer to the Chart of Account titles Chart of Accounts CHART OF ACCOUNTS Alaska Mining Co. General Ledger ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment 622 Gain on Sale of Mineral Rights 116 Merchandise Inventorv

Answer 1

WORKING NOTEs:
CALCULATION OF THE DEPLETION EXPENSES PER TON
Purchase Cost of Mineral Rights =		$            3,81,50,000
Expected Mineral deposits =		$            2,18,00,000	Tons
Depletion per ton of mineral = Total Csot of Mineral Rights / Expected mineral rights
Depletion per ton of mineral = $ 38,150,000 / 21,800,000 Tons
Depletion per ton of mineral =		$                          1.75	Per Ton
SOLUTION : A
	Depletion Expenses = Tons of Mineral mines and sol X Depletion rate per unit
	Depletion Expenses = 2,090,000 Tons X $ 1.75 =	$                36,57,500
SOLUTION : B
Date	Account Title and explanation	Debit	Credit
December , 31	Depletion Expenses	$36,57,500
	Accumulated Depletion		$36,57,500