Problem 6-33A (Algo) Accounting for depletion LO 6-8

Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities:

Jan.	1, Year 1		Purchased for $1,590,000 a silver mine estimated to contain 123,000 tons of silver ore.
July	1, Year 1		Purchased for $1,820,000 a tract of timber estimated to yield 2,840,000 board feet of lumber, and the residual value of the land was estimated at $136,000.
Feb.	1, Year 2		Purchased for $2,930,000 a gold mine estimated to yield 56,000 tons of gold-veined ore.
Sept.	1, Year 2		Purchased oil reserves for $1,338,000. The reserves were estimated to contain 244,000 barrels of oil, of which 16,000 would be unprofitable to pump.

Required

Determine the amount of depletion expense that would be recognized on the Year 1 income statement for each of the two reserves, assuming 14,200 tons of silver were mined and 550,000 board feet of lumber were cut.

Determine the amount of depletion expense that would be recognized on the Year 2 income statement for each of the four reserves, assuming 24,000 tons of silver are mined, 330,000 board feet of lumber are cut, 4,600 tons of gold ore are mined, and 97,000 barrels of oil are extracted.

Prepare the portion of the December 31, Year 2, balance sheet that reports natural resources.

Complete this question by entering your answers in the tabs below. Determine the amount of depletion expense that would be recognized on the Year 1 income statement for each of the two reserves, assuming 14,200 tons of silver were mined and 550,000 board feet of lumber were cut. Also determine the amount of depletion expense that would be recognized on the Year 2 income statement for each of the four reserves, assuming 24,000 tons of silver are mined, 330,000 board feet of lumber are cut, 4,600 tons of gold ore are mined, and 97,000 barrels of oil are extracted. (Round "per unit" values to 2 decimal places and final answers to the nearest whole dollar amount.) Prepare the portion of the December 31 , Year 2 , balance sheet that reports natural resources. (Round "per unit" values to 2 decimal places and final answers to the nearest whole dollar amount.)