Question

6. On April 2, 2017, Montana Mining Co. pays $4,017,260 for an ore deposit containing 1,480,000 tons. The company installs machinery in the mine costing $238,600, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Montana begins mining on May 1, 2017, and mines and sells 164,100 tons of ore during the remaining eight months of 2017.
  
Prepare the December 31, 2017, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine’s depletion. (Do not round intermediate calculations. Round your final answers to the nearest whole number.)

Journal entry worksheet Record the year-end adjusting entry for the depletion expense of ore mine. Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 Record entry Clear entry View general journal

Answer 1

	Journal entries
Date	General Journal	DEBIT ($)	CREDIT ($)
Dec-31	Depletion Expense of Mineral Deposit A/c	444,711.00
	To Accumulated Depletion of Mineral Deposit A/c		444,711.00
	(To record year-end adjusting entry for depletion expense of ore mine)
Dec-31	Depreciation Expense of Machinery	26,456.00
	To Accumulated Depreciation of Machinery		26,456.00
	(To record year-end adjusting entry for the depreciation expense of mining machinery)
	Explanation
	To Record depletion
	4,017,260/1,480,000 = 2.71 ton.
	164,100*2.71 = $444,711
	To record depreciation
	(164,100/1,480,000 * 238,600) = 26,456