Question

Glacier Mining Co. acquired mineral rights for $494,000,000. The mineral deposit is estimated at 475,000,000 tons. During the current year, 31,500,000 tons were mined and sold.

A.	Determine the depletion rate. Round your answer to two decimal places.
B.	Determine the amount of depletion expense for the current year.
C.	Journalize the adjusting entry on December 31 to recognize the depletion expense. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS
Glacier Mining Co.
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Supplies 119 Prepaid Insurance 120 Land 123 Delivery Truck 124 Accumulated Depreciation-Delivery Truck 125 Equipment 126 Accumulated Depreciation-Equipment 130 Mineral Rights 131 Accumulated Depletion 132 Goodwill 133 Patents LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends	REVENUE 410 Sales 610 Interest Revenue 620 Gain on Sale of Delivery Truck 621 Gain on Sale of Equipment 622 Gain on Sale of Mineral Rights EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Delivery Truck 523 Delivery Expense 524 Repairs and Maintenance Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Equipment 533 Depletion Expense 534 Amortization Expense-Patents 535 Insurance Expense 536 Supplies Expense 539 Miscellaneous Expense 710 Interest Expense 720 Loss on Sale of Delivery Truck 721 Loss on Sale of Equipment 722 Loss on Sale of Mineral Rights

A. Determine the depletion rate. Round your answer to two decimal places. per ton

B. Determine the amount of depletion expense for the current year.

C. Journalize the adjusting entry on December 31 to recognize the depletion expense. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1		Adjusting Entries
2
3

Answer 1

(a)-Depletion rate

Depletion rate = Acquisition cost / Ttal estimated mineral deposit

Depletion rate = $494,000,000 / 475,000,000 Tons

Depletion rate = $1.04 per Ton

(b)-The amount of depletion expense for the current year.

Amount of depletion expense for the current year = Number of tons mined and sold x Depletion rate

Amount of depletion expense for the current year = 31,500,000 Tons x $1.04 per Ton

Amount of depletion expense for the current year = $32,760,000

(c)-The adjusting entry on December 31 to recognize the depletion expense
Date	Accounts Tittle and Explanations	Debit ($)	Credit ($)
31-Dec	Depletion Expense A/c	32,760,000
	Accumulated Depletion A/c		32,760,000
	[The entry on December 31 to recognize the depletion expense]