Glacier Mining Co. acquired mineral rights for $494,000,000. The mineral deposit is estimated at 475,000,000 tons

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.

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

c. Journalize the adjusting entry on December 31 to recognize the depletion expense.

Answer:

a. $1.04 per ton = $494,000,000 ÷ 475,000,000 tons b. $32,760,000 = 31,500,000 tons × $1.04 per ton c. 31 Depletion Expense 32,760,000 Accumulated Depletion 32,760,000 Depletion of mineral deposit.