Accounting for depletion LO 8-7, 8-9 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

 Accounting for depletion LO 8-7, 8-9 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 $220,000 a silver mine estimated to contain 307,000 tons of silver ore. July 1, Year 1 Purchased for $2,010,000 cash a tract of land containing timber estimated to yield 2,950.000 board feet of lumber At the time of purchase, the land had an appraised of $199,000 Feb. 1, Year 2 Purchased for $718,000 gold wine estimated to yield 31,600 tons of gold-veined ore. Sept. 1, Year 2 Purchased oil reserves for $705,000. The reserves were estimated to contain 237,000 barrels of all of which 20,000 would be unprofitable to pump. Required a. Prepare the journal entries to account for the following: (1) The Year 1 purchases (2) Depletion on the Year 1 purchases, assuming that 71000 tons of silver were mined and 967.000 board feet of lumber were cut (3) The Year 2 purchases. (4) Depletion on the four natural resource assets, assuming that 61000 tons of silver ore, 1139,000 board feet of lumber 8,600 tons of gold ore, and 84.000 barrels of oil were extracted b. Prepare the portion of the December 31 Year 2, balance sheet that reports natural resources, C. Assume that in Year 3 the estimates changed to reflect only 65 120 tons of gold ore remaining. Prepare the depletion journal entry in Year 3 to account for the extraction of 45,584 tons of gold ore.