Financial Statements for Mining Company
Roscoe Corp. was organized on January 2, 2008. It was authorized to issue 74,000 shares of common stock. On the date of organization, it sold 20,000 shares at $50 per share and gave the remaining shares in exchange for certain land bearing recoverable ore deposits estimated by geologists at 900,000 tons. The property is deemed to have a value of $2,700,000 with no residual value. During 2008, purchases of mine buildings and equipment totaled $250,000.During the year, 75,000 tons were mined; 8,000 tons of this amount were unsold on December 31, the balance of the tonnage being sold for cash at $17 per ton. Expenses incurred and paid for during the year, exclusive of depletion and depreciation, were as follows:
|
Mining |
$173,500 |
|
Delivery |
20,000 |
|
General and administrative |
19,500 |
Cash dividends of $2 per share were declared on December 31, payable January 15, 2009. It is believed that buildings and sheds will be useful only over the life of the mine; hence, depreciation is to be recognized in terms of mine output.
Instructions: Prepare an income statement and a balance sheet for 2008.Ignore income taxes.