Try another version of this question Bedrock Quarry paid $508,500 for the right to extract mineral assets from a 550,000-ton deposit.
In addition to the purchase price, Bedrock Quarry also paid a $700 filing fee, a $1,500 license fee to the state, and $110,000 for a geological survey of the property.
Because Bedrock Quarry purchased the rights to the minerals only, it expects the asset to have zero residual value.
During the first year, Bedrock removed and sold 60,000 tons of the minerals.
Description Amount Subcategory, Purchase price of minerals Subcategory,Add related costs: Filing fee License Geological survey Single line Total Related Costs Single lineSingle line Total cost of minerals Single lineDouble line
Depletion per unit. (Round to two decimal places when needed and use rounded answer for calculations).
(Cost - Res. Value)/Units = Depletion per unit
( - )/= per unit
Depletion expense
Depletion per unit x Units used
x =
Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year.
Date Description Debit Credit a a b b c c Description Amount Subcategory, Purchase price of minerals 508,500 Subcategory,Add related costs: Filing fee 700 License 1,500 Geological survey 110,000Single line Total Related Costs Single line112,200Single line Total cost of minerals Single line620,700Double line Date Description Debit Credit a Minerals 508,500 a Cash 508,500 b Minerals 112,200 b Cash 112,200 c Depletion Expense-Minerals 67,800 c Accumulated Depletion-Minerals 67,800