Instructions Caldwell Mining Co. acquired mineral rights for $217,404,000. The m
ID: 2586533 • Letter: I
Question
Instructions Caldwell Mining Co. acquired mineral rights for $217,404,000. The mineral deposit is estimated at 356,400,000 tons. During the current year, 40,156,000 tons were mined and sold. Required A. Determine the depletion rate. B. Determine the amount of depletion expense for the current year. C. Journalize the adjusting entry on December 31 to recognize the depletion expense. Refer to the Chart of Accounts for exact wording of account titles. Starting Questions A. Determine the depletion rate. $ per ton B. Determine the amount of depletion expense for the current year.Explanation / Answer
Depletion rate = Acquisition cost/Estimated production
= 217404000/356400000
Depletion rate = 0.61 Per ton
Depletion expenses = 40156000*.61 = 24495160
c) Journal entry :
Date accounts & explanation debit credit Dec 31 Depletion expenses a/c 24495160 Accumlated Depletion a/c 24495160 (To record depletion expenses)