Question

Alaska Mining Co. acquired mineral rights for $28,050,000. The mineral deposit is estimated at 16,500,000 tons. During the current year, 1,540,000 tons were mined and sold. Required: a. Determine the amount of depletion expense for the current year. b. Journalize the adjusting entry on December 31 to recognize the depletion expense. Refer to the Chart of Accounts for exact wording of account titles.

I NEED A JOURNAL ENTRY. THANKS

Answer 1

(a)

Cost of mineral rights = $28050000

Estimated Total Mineral Deposit = 16500000 tons.

Mined sold in current year = 1540000 tons.

Depletion Expense for current year =

(Cost of mineral rights* Mined sold in current year)/ Estimated Total Mineral Deposit

= ($28050000*1540000 tons)/16500000 tons =$ 2618000

(b)

Adjusting Journal entries to recognize the depletion expense:

Date	Account Title and Explanation	Debit($)	Credit($)
December 31	Depletion Expense	2618000
	Accumulated Depletion		2618000