Question

Pl be original I will rate-

Question: Prepare the journal entries for all the following related transaction (all occurring within the current year). Assume all depletion and amortization for the full year. Also assume all purchases were made with cash A. An exploration company purchased land with a valuable ore deposit, Estimated ore available in the deposit (in tons) Acquisition price Residual value of land once ore is fully depleted Ore removed in the current year (in tons) 4,700,000 $3,500,000 $500,000 365,000 B. The exploration company developed a high speed drill to use in its explorations Economic life of the drill (in years) Costs incurred in the current year to develop the drill Attorney fees incurred to protect the patent 5 $550,000 $15,000 C. The exploration company purchased Goshen Hole Company Acquisition price Book Value of Goshen Hole Company $3,250, 600 $2,415,960

Answer 1

A.  

1. LAND A/C DR. $3000000

TO CASH A/C $3000000

(BEING LAND PURCHASED)

2. PROFIT AND LOSS A/C DR. $232978.72

TO LAND A/C $232978.72

(BEING PARTIAL LAND AMOUNT WRITTEN OFF IN THE RATIO OF

ORE REMOVED DURING CURRENT YEAR I.E.

3000000 X 365000 / 4700000 )

B.

1. HIGH SPEED DRILL A/C DR. $550000

ATTORNEY FEES A/C DR. $15000   

TO CASH A/C $565000

(BEING COST INCURRED FOR HIGH SPEED DRILL AND

ATTORNEY FEES TO PROTECT THE PATENT)  

2. PROFIT AND LOSS A/C DR. $125000

TO HIGH SPEED DRILL A/C . $110000

TO ATTORNEY FEES A/C $15000

(BEING AMOUNT WRITTEN OFF IN THE RATIO OF

ECONOMIC LIFE OF THE DRILL THAT IS 5 YEARS)

C.

1. GOSHEN HOLE COMPANY A/C DR. $2415960

GOODWILL A/C DR. $834640

TO CASH A/C $3250600

(BEING COMPANY PURCHASED)

2. PROFIT AND LOSS A/C DR. $834640

TO GOODWILL A/C $834640 (BEING GOODWILL AMOUNT WRITTEN OFF)