Question

* Question 2 Blossom Ltd. acquired the rights to use 2,500 hectares of land in northern Alberta to mine for uranium. The cout of the land was $114,000, exploration costs were $214,000, and the development costs incurred were $628,250. All of these costs were capitalized. The company estimated that the mine would produce about 225,000 ounces of uranium. In the first year, 28,800 ounces were extracted from the mine, of which 11,800 were sold. Asume all purchases were cash. Prepare the journal entries on the books of Blossom Ltd. to record the purchase and capitalization of the mine. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Dehit Credit Prepare the journal entry on the books of Blossom Ltd, to record depletion costs for the first year. (Round per unit cost to 2 decimal places e.o. 5.75 and final answers to O decimal places 1.0.5.27. Credit account titles are automatically Indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts Account Titles and Explanation Prepare the journal entry on the books of Blossom Ltd. to record the cost of uranium sold for the first year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Account Titles and Explanation Debit Credit

Answer 1

Account titles and explanation	Debit	Credit
Land right A/c(Intangible Asset)	114,000
Development cost	628,250
Exploration Cost	214,000
To, Bank		956,250
(Being cost incurred)
Mines A/c	956,250
To, Exploration Cost		214,000
To, Development cost		628,250
To, Land right		114,000
(Being Cost capitalized)
			Calculation of Depletion
Depletion A/c	122,400			28,800	x	956250	=	122,400
To, Mines A/c		122,400		225,000
(Being depletion recorded)
Statement of Profit and loss A/c Dr.	122,400
To, Depletion A/c		122,400
(Being depletion trasferred to P&L)
No entry to be made.