Sunset Mountain Mining paid $362,300 for the right to extract mineral assets from a 350,000-ton deposit. In addition to the purchase price, Sunset also paid a $300 filing fee, a $2,400 license fee to the state of Nevada, and $55,000 for a geological survey of the property. Because Sunset purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Sunset removed and sold 40,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Sunset Mountain Mining paid $362,300 for the right to extract mineral assets from a 350,000-ton deposit. In addition to the purchase price, Sunset also paid a $300 filing fee, a $2,400 license fee to the state of Nevada, and $55,000 for a geological survey of the property. Because Sunset purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Sunset removed and sold 40,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sunset
Mountain Mining paid
$362,300
for the right to extract mineral assets from a
350,000-ton
deposit. In addition to the purchase price,
Sunset
also paid a
$300
filing fee, a
$2,400
license fee to the state of Nevada, and
$55,000
for a geological survey of the property. Because
Sunset
purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year,
Sunset
removed and sold
40,000
tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the
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