Question

On July 1, 2015, Friedman Inc. invested $720,000 in a mine estimated to have 900,000 tons of ore of uniform grade. During the last 6 months of 2015, 100,000 tons of ore were mined and sold. Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.) Depletion cost per unit $ 0.9 SHOW LIST OF ACCOUNTS LINK TO TEXT Prepare the journal entry to record depletion expense. (Round answer to 0 decimal places, e.g. 2,125. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 SHOW LIST OF ACCOUNTS LINK TO TEXT Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How are the costs applicable to the 20,000 unsold units reported? The costs pertaining to the unsold units are reported in as part of .

Answer 1

Part1

Depletion Cost per unit

720000/900000

0.8

Part2: Date Account Titles and Explanation Debit Credit 1 Depletion Expenses    80,000.00 To Accumulated Depletion    80,000.00 (100,000*(720,000/900,000)) Part3: The cost related to the unsold unit is reported in current assets as part of the inventory. Cost of Unsold unit 20,000*(720,000/900,000)    16,000.00 Cost of sold unit 80,000*(720,000/900,000)    64,000.00 Dear student, If you have any doubts or issue related to the question please comment your query or concern, I will address it. Also, do give a positive rating.