Boulder Mines paid $426,000 for the right to extract ore from a 275,000-ton mineral deposit. In addition to the purchase price. Boulder Mines also paid a $120 filling fee, a $2,100 license fee to the state of Colorado, and $64,030 for a geologic survey of the property. Because the company purchased the rights to the minerals only. It expects the asset to have zero residual value when fully deposited. During the first year of production, Boulder Mines removed 40,000 tons of ore, of which it sold 34,000 tons.

Requirement

Make journal Entries to record

(a) purchase of the mineral rights,

(b) payment of fees and other costs,

(c) depletion for first-year production, and

(d) sales of ore. Round Depletion per unit to the closest cent

Answer rating: 100% (QA)

Journal entries Accounts title and explanations Debit Credit Mineral rights Dr 426000 Cash Accoun... View the full answer