Question

Depletion Entries Alaska Mining Co. acquired mineral rights for $67,500,000. The mineral deposit is estimated at 30,000,000 tons. During the current year, 4,000,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. Round the depletion rate to two decimal places. b. Journalize the adjusting entry on December 31 to recognize the depletion expense. If an amount box does not require an entry, leave it blank. Dec. 31 10 more Check My Work uses remaining.

Answer 1

a.

Depletion expense for tons = Cost of mineral rights / Estimated deposit

= 67,500,000/30,000,000

= $2.25 per ton

Depletion expense for the current year = Depletion expense per ton x Tons mined and sold

= 2.25 x 4,000,000

= $9,000,000

b.

Depletion expense	$9,000,000
Mineral Mine		$9,000,000

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