On July 23 of the current year, Dakota Mining Co. pays $4,836,000 for land estim

Question

On July 23 of the current year, Dakota Mining Co. pays $4,836,000 for land estimated to contain 7,800,000 tons of recoverable ore. It installs machinery costing $390,000 that has a 10-year life and no salvage value and is capable of mining the ore deposit in eight years. The machinery is paid for on July 25, seven days before mining operations begin. The company removes and sells 400,000 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.

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

I need to come up with the depreciation amount for the machinery. I can't figure it out. So any help with steps on how you got the answer would be great. Thanks.

Explanation / Answer

d) dec31           depreciation a/c.....dr                 $20,000

                            To machinery a/c                      $20,000

                      (calculation   $390000 *4lac tonnes/78lac tonnes)

refer link

http://www.cramster.com/answers-aug-11/accounting/journal-entries-july-23-current-year-dakota-mining-pays-483_1419751.aspx?rec=0

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