Question

Earth's Treasures Mining Co. acquired mineral rights for $58,500,000. The mineral deposit is estimated at 65,000,000 tons. During the current year, 14,300,000 tons were mined and sold.

a. Determine the depletion rate. If required, round your answer to two decimal places.
$ per ton

b. Determine the amount of depletion expense for the current year.
$

c. Journalize the adjusting entry on December 31 to recognize the depletion expense. If an amount box does not require an entry, leave it blank.

Dec. 31

Answer 1

Solution a:

Depletion rate = Cost of mineral rights / Estimated mineral deposits = $58,500,000 / 65,000,000 = $0.90 per ton

Solution b:

Amount of depletion expense for the current year = Tons of mineral mined * depletion rate = 14,300,000 * $0.90 = $12,870,000

Solution c:

Earth's Treasures Mining Company
Journal Entries
Date	Particulars	Debit	Credit
31-Dec	Depletion expense Dr	$12,870,000.00
	To Accumulated depletion		$12,870,000.00
	(To record depletion expense)