Question

Depletion Entries Alaska Mining Co. acquired mineral rights for $13,923,000. The mineral deposit is estimated at 107,100,000 tons. During the current year, 16,050,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. Round the depletion rate to two decimals places. $ b. Journalize the adjusting entry on December 31 to recognize the depletion expense.

Answer 1

Depletion expense for the year = $ 2,086,500

.

Date	Accounts title	Debit	Credit
Dec 31	Depletion expense	$ 2,086,500
	Accumulated Depletion		$ 2,086,500
	(depletion expense recorded)

.

Units of Production method
A	Cost	$ 13,923,000
B	Residual Value	$ 0
C=A - B	Depletion base	$ 13,923,000
D	Usage in units(in Tons)	107,100,000
E	Depletion per tonn	$                        0.13

.

Depreciation schedule-Units of Activity
Year	Book Value	Usage	Depletion expense
1	$        13,923,000	16050000	$             2,086,500