Question

Sorry for the format, please just ignor the lines and boxes.

1. Tyler Industries operates a mineral deposit with an estimated 1,500,000 tons of available ore. The mineral deposit was purchased for $1,500,000, and no salvage value is expected. A total of 200,000 tons are mined, but only 100,000 tons were sold during the year. How would the company record this transaction?

		Debit Depletion Expense-Mineral Deposit for $100,000, debit Ore Inventory for $100,000, and credit Accumulated Depletion-Mineral Deposit for $200,000.
		Debit Depletion Expense-Mineral Deposit for $200,000 and credit Accumulated Depletion-Mineral Deposit for $200,000.
		Debit Depletion Expense-Mineral Deposit for $100,000 and credit Accumulated Depletion-Mineral Deposit for $100,000.
		Debit Mineral Expense for $200,000 and credit Mineral Deposit for $200,000.
		Debit Amortization Expense-Mineral Deposit for $200,000, credit Ore Deposit for $100,000 and credit Accumulated Depletion-Mineral Deposit for $100,000. 2. A company's annual accounting period ends on December 31. During the current year, a depreciable asset that cost $24,000 was purchased on October 1. The asset has a $1,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a six-year life. What is the total depreciation expense for the current year? $3,833.33 $958.33 $4,000.00 $1,000.00 $1,041.67 3. Terrence Manufacturing pays $5,000 to replace the manual control system on one of its machines with an automated system. The machine is expected to be more productive as a result. How would the company record this transaction? Debit Machinery for $5,000 and credit Cash for $5,000. Debit Repairs Expense for $5,000 and credit Cash for $5,000. Debit Betterment Expense for $5,000 and credit Cash for $5,000. Debit Extraordinary Repair Expense for $5,000 and credit Cash for $5,000. Debit Depreciation Expense for $5,000 and credit Cash for $5,000. 4. A machine is purchased and used throughout its predicted useful life of five years. The depreciable cost equals $50,000. The company uses the straight-line method. How would the company record the adjusting entry to record the depreciation on this machine at the end of each of the years in its useful life? Debit Machinery for $50,000 and credit Cash for $50,000. Debit Machinery Expense for $10,000 and credit Machinery for $10,000. Debit Depreciation Expense for $10,000 and credit Accumulated Depreciation-Machinery for $10,000. Debit Accumulated Depreciation-Machinery for $10,000 and credit Depreciation Expense for $10,000. Debit Depreciation Expense for $10,000 and credit Machinery for $10,000.

Answer 1

1)
Tyler Industries operates a mineral deposit with an estimated 1,500,000 tons of available ore. The mineral deposit was purchased for $1,500,000, and no salvage value is expected. A total of 200,000 tons are mined, but only 100,000 tons were sold during the year. How would the company record this transaction?
Depletion cost per unit = (Cost – salvage or residual value) / total amount expected to be used over its lifetime
Depletion cost per unit = ($1,500,000 - $0) /1,500,000	$1.00
Journal Entry
Depletion Expense-Mineral Deposit (100,000 x $1)	$100,000.00
Ore Inventory (100,000 x $1)	$100,000.00
Accumulated Depletion-Mineral Deposit		$200,000.00
Debit Depletion Expense-Mineral Deposit for $100,000, debit Ore Inventory for $100,000, and credit Accumulated Depletion-Mineral Deposit for $200,000.
2)
2. A company's annual accounting period ends on December 31. During the current year, a depreciable asset that cost $24,000 was purchased on October 1. The asset has a $1,000 estimated salvage value. The company uses straight-line depreciation and expects the asset to have a six-year life. What is the total depreciation expense for the current year?	$958.33
Depreciation Expenses = ($24000- $1000)/6 x 3/12
3. Terrence Manufacturing pays $5,000 to replace the manual control system on one of its machines with an automated system. The machine is expected to be more productive as a result. How would the company record this transaction?
Debit Machinery for $5,000 and credit Cash for $5,000.
4. A machine is purchased and used throughout its predicted useful life of five years. The depreciable cost equals $50,000. The company uses the straight-line method. How would the company record the adjusting entry to record the depreciation on this machine at the end of each of the years in its useful life?
Debit Depreciation Expense for $10,000 and credit Accumulated Depreciation-Machinery for $10,000.
Depreciation Expenses = $50,000/5	$10,000.00