Question

Required information The following information applies to the questions displayed below.] On July 23 of the current year, Dakota Mining Co. pays $6,432,000 for land estimated to contain 8,040,000 tons of recoverable ore. It installs and pays for machinery costing $1,045,200 on July 25. The company removes and sells 411,000 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. (d) The first five months' depreciation on the machinery. Complete this question by entering your answers in the tabs below. Required A Required B Required c1 Required C2 Required Di Required D2 Prepare the journal entry to record the purchase of the land. View transaction list < Prey 8 9 of 9 !!! Next >

Answer 1

No General Journal Credit 1 Date July 23 Account name Mineral Deposit Cash Debit $6,432,000 $6,432,000 b) No General Journal Credit 1 Date July 23 Account name Machinery Cash Debit $1,045,200 $1,045,200 Compute depletion per tone as follows: Cost - Salvage Depletion= Total units of production $6,432,000 8,040,000 =$0.8 per ton

Calculate depletion expense: Depletion per tone Tonnage Depletion expense ($0.8 x 411,000) $0.80 411,000 $328,800 Credit No General Journal I Date Accouf name Dec 31 Depletion expense-Mineral Deposit Accumulated Depletion expense-Mineral Deposit Debit $328,800 $328,800 Compute depreciation per tone as follows: Cost-Salvage Depreciation= Total units of production $1,045,200 8,040,000 =$0.13 per ton

Calculate depreciation expense: Depreciation per tone Tonnage Depreciation expense ($0.13 x 411,000) $0.13 411,000 $53,430 Credit No General Journal Date Account name 1 Dec. 31 Depreciation expense Machinery Accumulated Depreciation expense-Machinery Debit $53,430 $53,430