Business, 06.04.2021 01:20 angellinelittle

The Hollister Company acquires a silver mine at the cost of $1,600,000 on January 1. Along with the purchase price Hollister pays additional costs associated with development of $50,000. Hollister expects the mine will have a salvage value of $175,000 once all the silver has been mined. Best estimates are that the mine contains 250,000 tons of ore. a. Prepare the entry to record the purchase of the silver mine.
b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold.
c. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the ore are sold.

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Answer from: Caleb0018

Part a

Debit : Silver Mine $1,650,000

Credit : Cash $1,650,000

Part b

Debit : Depletion expense $354,000

Credit : Accumulated depletion $354,000

Part c

Debit : Depletion expense $354,000

Credit : Accumulated depletion $354,000

Explanation:

Step 1 : Cost of the Silver Mine

Purchase Price $1,600,000

Development Costs $50,000

Total Cost $1,650,000

Step 2 : Depletion rate

Depletion rate = (Cost - Salvage value) ÷ Estimate Usage

= $5.90

Step 3 : Depletion expense

Note : Depletion expense depends on units mined only instead of units sold.

Depletion expense = Depletion rate x Units mined

if 60,000 tons of ore are mined and sold :

Depletion expense = $354,000

if 60,000 tons of ore are mined but only 15,000 tons of the ore are sold :

Depletion expense = $354,000

Answer from: Quest

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7. customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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The Hollister Company acquires a silver mine at the cost of $1,600,000 on January 1. Along with the...

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