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Prepare the journal entry to record depletion

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Question

On July 23 of the current year, Dakota Mining Co. pays $6,831,840 for land estimated to contain 7,944,000 tons of recoverable ore. It installs and pays for machinery costing $1,668,240 on July 25. The company removes and sells 408,000 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.

Required:

Prepare entries to record the following. (Do not round your intermediate calculations. Round "Depletion per ton" to two decimal places and round all other answers to the nearest whole dollar.)

(a) The purchase of the land.

(b) The cost and installation of machinery.

(c) The first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.

Prepare the journal entry to record depletion of the Mineral deposit at December 31.

(d) The first five months' depreciation on the machinery.

Prepare the journal entry to record depreciation of the machine at December 31.

Reference no: EM132809512

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