A. In March 2020, L&P Corp., a mining and construction company, purchased for $5,600,000 a mine...

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A. In March 2020, L&P Corp., a mining and construction company, purchased for $5,600,000 a mine estimated to contain 2 million tons of ore. When the ore is completely extracted, it is expected that the land would be worth $200,000. A building and equipment costing $2,800,000 were constructed on the mine site before any extraction commenced, and they will be completely used up and have no residual value when the ore is exhausted. During March - December 2020, 750,000 tons of ore were mined, and 680,000 tons were sold. Required: i. Compute the depletion rate. Total cost of mineral resource Residual value Depletion base Depletion Rate per ton ii. Prepare the necessary journal entry to record the depletion cost for 2020. Dec 31, 2020: Dr. Cr. (4 marks) ii. Compute the total cost of inventory of ore mined at December 31, 2020. Total cost of inventory (1 mark) iv. Compute the cost of goods sold (ore mined) at December 31, 2020. Cost of goods sold %24 В. L&P was contracted to construct a building for Rosco at the beginning of 2020. L&P uses the percentage-of- completion method of revenue recognition since, given the characteristics of its business and contracts, it is the most appropriate method. Progress toward completion is measured on a cost-to-cost basis. At the end of the year, December 31, 2020, the following was the status of that construction contract for L&P Corp: Billings to date $4,500,000 Costs incurred to date: Labour $ 928,000 Materials and subcontractor 1,296,000 Indirect costs 386,000 Latest forecast total cost $6,000,000 Contract Price $8,000,000 It should be noted that included in the above costs incurred to date were standard electrical and mechanical materials stored on the job site, but not yet installed, costing $210,000. These costs should not be considered in the costs incurred to date. Required i. Compute the percentage of completion on the contract at the end of 2020. Costs Incurred to Date Total Estimated Costs Percentage of Completion % (3 marks) ii. Indicate the amount of gross profit that would be reported on this contract at the end of 2020. Revenue Costs incurred Gross profit %24 %24 %24 ii. Prepare the journal entry to record the income (loss) for 2020 on L&P books. Dr. Construction Expenses Dr. Construction in Process - Gross Profit Cr. Construction in Process - Gross Loss Cr. Revenue from Long-Term Contracts A. In March 2020, L&P Corp., a mining and construction company, purchased for $5,600,000 a mine estimated to contain 2 million tons of ore. When the ore is completely extracted, it is expected that the land would be worth $200,000. A building and equipment costing $2,800,000 were constructed on the mine site before any extraction commenced, and they will be completely used up and have no residual value when the ore is exhausted. During March - December 2020, 750,000 tons of ore were mined, and 680,000 tons were sold. Required: i. Compute the depletion rate. Total cost of mineral resource Residual value Depletion base Depletion Rate per ton ii. Prepare the necessary journal entry to record the depletion cost for 2020. Dec 31, 2020: Dr. Cr. (4 marks) ii. Compute the total cost of inventory of ore mined at December 31, 2020. Total cost of inventory (1 mark) iv. Compute the cost of goods sold (ore mined) at December 31, 2020. Cost of goods sold %24 В. L&P was contracted to construct a building for Rosco at the beginning of 2020. L&P uses the percentage-of- completion method of revenue recognition since, given the characteristics of its business and contracts, it is the most appropriate method. Progress toward completion is measured on a cost-to-cost basis. At the end of the year, December 31, 2020, the following was the status of that construction contract for L&P Corp: Billings to date $4,500,000 Costs incurred to date: Labour $ 928,000 Materials and subcontractor 1,296,000 Indirect costs 386,000 Latest forecast total cost $6,000,000 Contract Price $8,000,000 It should be noted that included in the above costs incurred to date were standard electrical and mechanical materials stored on the job site, but not yet installed, costing $210,000. These costs should not be considered in the costs incurred to date. Required i. Compute the percentage of completion on the contract at the end of 2020. Costs Incurred to Date Total Estimated Costs Percentage of Completion % (3 marks) ii. Indicate the amount of gross profit that would be reported on this contract at the end of 2020. Revenue Costs incurred Gross profit %24 %24 %24 ii. Prepare the journal entry to record the income (loss) for 2020 on L&P books. Dr. Construction Expenses Dr. Construction in Process - Gross Profit Cr. Construction in Process - Gross Loss Cr. Revenue from Long-Term Contracts