O'Malley Resources, Inc., balance sheet includes three assets: Natural Gas, Oil, and Coal Reserves. Suppose O'Malley Resources,

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O'Malley Resources, Inc., balance sheet includes three assets: Natural Gas, Oil, and Coal Reserves. Suppose O'Malley Resources, Inc., paid $1,700,000 cash for the right to work a mine with an estimated 75,000 tons of coal. Assume the company paid $64,500 to remove unwanted buildings from the land and $52,000 to prepare the surface for mining. Further, assume that O'Malley Resources, Inc., signed a $45,000 note payable to a company that will return the land surface to its original condition after the mining ends. During the first year O'Malley Resources, Inc., removed 18,000 tons of coal, which it sold on account for $58 per ton. Operating expenses for the first year totaled $212,000, all paid in cash.

Requirements

1. Record all of O'Malley Resources, Inc.'s transactions, including depletion, for the first year.

2. Prepare the company's income statement for its coal operations for the first year?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Financial Accounting

ISBN: 978-0134436111

4th edition

Authors: Robert Kemp, Jeffrey Waybright

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