A coal company invests $20 million in a mine estimated to have 10 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 500,000 tons of coal are extracted and sold. What is the depletion expense for the first year?

a. $500,000

b. $1,000,000

c. $4,000,000

d. Cannot be determined from the information provided.

Dumbledore Company incurred $600,000 of research and development costs in its laboratory to develop a new product. It spent $90,000 in legal fees for a patent granted on January 2, 2020. On July 31, 2020, Dumbledore paid $60,000 for legal fees in a successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2020?

a. $600,000

b. $150,000

c. $750,000

d. Some other amount

On October 1, 2020, Oscars Construction Company borrows $100,000 from Carruthers Bank on a 3-month, $100,000, 8% note. The entry by Oscars Construction Company to record payment of the note and accrued interest on January 1,2021 is (assume a calendar year for Oscars)

a. Notes Payable....................................................................... 102,000

Cash.............................................................................. 102,000

b. Notes Payable....................................................................... 100,000

Interest Payable..................................................................... 2,000

Cash.............................................................................. 102,000

c. Notes Payable....................................................................... 100,000

Interest Payable..................................................................... 2,000

Cash.............................................................................. 102,000

d. Notes Payable....................................................................... 100,000

Interest Expense.................................................................... 2,000

Cash.............................................................................. 102,000