Air heart Oil Company s balance sheet includes three

assets Natural Gas #608

Air-heart Oil Company’s balance sheet includes three assets: Natural Gas, Oil, and Coal.
Suppose Air-heart Oil Company paid $1,900,000 cash for the right to work a mine with an
estimated 200,000 tonnes of coal. Assume the company paid $68,000 to remove unwanted
buildings from the land and $45,000 to prepare the surface for mining. Further, assume that Air-
heart Oil Company signed a $33,000 note payable to a company that will return the land surface
to its original condition after the mining ends. During the first year, Air-heart Oil Company
removed 41,000 tonnes of coal, which it sold on account for $36 per ton. Operating expenses
for the first year totaled $248,000 all paid in cash.Requirements1. Record all of Air-heart Oil
Company’s transactions, including depletion, for the year.2. Prepare the company’s income
statement for its coal operations for the year.View Solution:
Air heart Oil Company s balance sheet includes three assets Natural Gas

ANSWER
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