Account question depletion?

Question

On January 1, 2007, West Mountain Mining Company purchased the rights to a coal mine for $15,000,000. The company expects the coal mine to produce 10,000,000 pounds of coal. During 2007, West Mountain Mining removed 550,000 pounds of coal.


Requirement 1:

Prepare the journal entry to record the purchase on January 1, 2007.(Omit the "$" sign in your response.)


General Journal
Debit
Credit

(Click for List) Depreciation expense Accumulated depreciation Depletion expense Accumulated depletion Mining rights Land Cash Accounts payable Notes payable Notes receivable



(Click for List) Depreciation expense Accumulated depreciation Depletion expense Accumulated depletion Mining rights Land Cash Accounts payable Notes payable Notes receivable




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Requirement 2:

How much depletion should West Mountain Mining Company record for 2007? (Round your answer to the nearest whole dollar. Round depletion per unit to two decimal places. Omit the "$" sign in your response.)


Annual depletion expense
$




Requirement 3:

What is the book value of the coal rights at December 31, 2007, the end of the fiscal year? (Omit the "$" sign in your response.)


Book value
$

Answer 1

Requirement 1:
Prepare the journal entry to record the purchase on January 1, 2007.(Omit the "$" sign in your response.)
General Journal
Debit Mining Rights 15,000,000
Credit Notes Payable 15,000,000 (possibly Accounts Payable, but more likely notes payable)

Requirement 2:
How much depletion should West Mountain Mining Company record for 2007? (Round your answer to the nearest whole dollar. Round depletion per unit to two decimal places. Omit the "$" sign in your response.)

Annual depletion expense
$825,000 (Depletion per unit 1.50)

Requirement 3:
What is the book value of the coal rights at December 31, 2007, the end of the fiscal year? (Omit the "$" sign in your response.)

Book value
$14,175,000