Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities: January 1, Year 1 Purchased for $190,000 a silver mine estimated to contain 768,000 tons of silver ore. July 1, Year 1 February 1, Year 2 September 1, Year 2 Purchased for $1,830,000 cash a tract of land containing timber estimated to yield 3,060,000 board feet of lumber. At the time of purchase, the land had an appraised of $186,000. Purchased for $735,000 a gold mine estimated to yield 29,300 tons of gold-veined ore. Purchased oil reserves for $784,000. The reserves were estimated to contain 254,000 barrels of oil, of which 15,000 would be unprofitable to pump. Required a. Prepare the journal entries to account for the following items. Assume all purchase transactions were made with cash. (1) The Year 1 purchases. (2) Depletion on the Year 1 purchases, assuming that 65,000 tons of silver were mined and 956,000 board feet of lumber were cut. (3) The Year 2 purchases. (4) Depletion on the four natural resource assets, assuming that 61,000 tons of silver ore, 1,174,000 board feet of lumber, 8,600 tons of gold ore, and 77,000 barrels of oil were extracted. b. Prepare the portion of the December 31, Year 2, balance sheet that reports natural resources. c. Assume that in Year 3 the estimates changed to reflect only 47,360 tons of gold ore remaining. Prepare the depletion journal entry in Year 3 to account for the extraction of 33,152 tons of gold ore.
Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities: January 1, Year 1 Purchased for $190,000 a silver mine estimated to contain 768,000 tons of silver ore. July 1, Year 1 February 1, Year 2 September 1, Year 2 Purchased for $1,830,000 cash a tract of land containing timber estimated to yield 3,060,000 board feet of lumber. At the time of purchase, the land had an appraised of $186,000. Purchased for $735,000 a gold mine estimated to yield 29,300 tons of gold-veined ore. Purchased oil reserves for $784,000. The reserves were estimated to contain 254,000 barrels of oil, of which 15,000 would be unprofitable to pump. Required a. Prepare the journal entries to account for the following items. Assume all purchase transactions were made with cash. (1) The Year 1 purchases. (2) Depletion on the Year 1 purchases, assuming that 65,000 tons of silver were mined and 956,000 board feet of lumber were cut. (3) The Year 2 purchases. (4) Depletion on the four natural resource assets, assuming that 61,000 tons of silver ore, 1,174,000 board feet of lumber, 8,600 tons of gold ore, and 77,000 barrels of oil were extracted. b. Prepare the portion of the December 31, Year 2, balance sheet that reports natural resources. c. Assume that in Year 3 the estimates changed to reflect only 47,360 tons of gold ore remaining. Prepare the depletion journal entry in Year 3 to account for the extraction of 33,152 tons of gold ore.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:S
b. Prepare the portion of the December 31, Year 2, balance sheet that reports natural resources.
c. Assume that in Year 3 the estimates changed to reflect only 47,360 tons of gold ore remaining. Prepare the depletion journal e
in Year 3 to account for the extraction of 33,152 tons of gold ore.
Complete this question by entering your answers in the tabs below.
Required C
Assume that in Year 3 the estimates changed to reflect only 47,360 tons of gold ore remaining. Prepare the depletion journal entry i
Year 3 to account for the extraction of 33,152 tons of gold ore. (Round intermediate calculation to 2 decimal places and final answer
nearest dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Show le
Required A Required B
View transaction list
No
1
Date
Year 3
View journal entry worksheet
Depletion expense
Gold mine
General Journal
< Required B
Required C
Debit
Credit
X
Transcribed Image Text:Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the
company has engaged in the following activities:
January 1, Year 1
July 1, Year 1
February 1, Year 2
September 1, Year 2
Purchased for $190,000 a silver mine estimated to contain 768,000 tons of silver ore.
Purchased for $1,830,000 cash a tract of land containing timber estimated to yield 3,060,000 board
feet of lumber. At the time of purchase, the land had an appraised of $186,000.
Purchased for $735,000 a gold mine estimated to yield 29,300 tons of gold-veined ore.
Purchased oil reserves for $784,000. The reserves were estimated to contain 254,000 barrels of oil,
of which 15,000 would be unprofitable to pump.
Required
a. Prepare the journal entries to account for the following items. Assume all purchase transactions were made with cash.
(1) The Year 1 purchases.
(2) Depletion on the Year 1 purchases, assuming that 65,000 tons of silver were mined and 956,000 board feet of lumber were cut.
(3) The Year 2 purchases.
(4) Depletion on the four natural resource assets, assuming that 61,000 tons of silver ore, 1,174,000 board feet of lumber, 8,600 tons
of gold ore, and 77,000 barrels of oil were extracted.
b. Prepare the portion of the December 31, Year 2, balance sheet that reports natural resources.
c. Assume that in Year 3 the estimates changed to reflect only 47,360 tons of gold ore remaining. Prepare the depletion journal entry
in Year 3 to account for the extraction of 33,152 tons of gold ore.
Complete this question by entering your answers in the tabs below.
Required A Required B
Natural Resources
Required C
Prepare the portion of the December 31, Year 2, balance sheet that reports natural resources. (Round your answers to the
nearest dollar amount.)
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