Il of- X FrediMore Infory foc., PTouchstone Resources, Inc.'s balance sheet includes three assets: Natural gas, Oil, and Coalreserves. Suppose Touchstone Resources, Inc., paid S2,100,000 in cash for the right to work amine with an estimated 100,000 tons of coal. Assume the company paid $60,000 to removeunwanted buildings from the land and $41,000 to prepare the surface for mining. Further,assume that Touchstone Resources, Inc., signed a $35,000 note payable to a company thatwill return the land surface to its original condition after the mining ends. During the first year,Touchstone Resources, Ic., removed 43,000 tons of coal, which it sold on account for $42 perton. Operating expenses for the first year totaled $427,000, all paid in cash.PrintDone Consider the following:A (Click the icon to view the information.)Requirements1. Record all of Touchstone 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.Requirement 1. Record all of Touchstone Resources, Inc.'s transactions, including depletion, for the first year. (Record debits first, then credits. Exclude explanationsfrom all journal entries.)Begin by recording the entry for the acquisition of the right to work the mine.Touchstone Resources, Inc., paid $2,100,000 in cash for the right to work a mine with an estimated 100,000 tons of coal.Journal EntryDateAccountsDebitCredit

Step 1 Journal is the part of book keeping.

Requirements 1. Řecord all of Touchstone 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.

Requirements 1. Řecord all of Touchstone 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.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 1.3AIC: Estimate the average total estimated useful life of depreciable property, plant, and equipment....

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Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $2,088,450. It estimated it would extract 17,550 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.15 million, $4.35 million, and $3.1 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($15,400), $667,500, and $662,500, respectively. In years 1-3, LCM extracted 18,550 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) (1) Tons of Coal 17,550 (2) Basis $2,088,450 Depletion (2)/(1) Rate $119.00 Year 1 2,400 Tons Extracted per Year Year 2 11,450 Year 3 4,700 c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year? Depletion Expense Year 1 Year 2 $…
Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $1,667,600. It estimated it would extract 18,950 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.32 million, $5 million, and $4.1 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($17,500), $702,500, and $695,000, respectively. In years 1-3, LCM extracted 19,950 tons of coal as follows: (1) Tons of Coal 18,950 Depletion (2) Basis (2)+(1) Rate $1,667,600 $88.00 Year 3 Year 1 4,800 6,000 Note: Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars. Tons Extracted per Year Year 2 9,150 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)? Year 1 Year 2 Year 3 Percentage Depletion
Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $750,000. It estimated it would extract 12.000 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1 million, $3 million, and $2 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($20,000). $500,000, and $450,000, respectively. In years 1-3, LCM actually extracted 13,000 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) (3) Tons of Coal 12,000 Year 1 2 3 Depletion (2) (2)/(1) Basis Rate $750,000 $62.50 Tons Extracted per Year Year 1 Year 21 Year 3 2,000 7,200 3,800 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)? Percentage Depletion
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