Salter Mining Company purchased the Northern Tier Mine for $58,000,000 cash. The

Question

Salter Mining Company purchased the Northern Tier Mine for $58,000,000 cash. The mine was estimated to contain 1,120,000 tons of ore and to have a residual value of $8,000,000.

During the first year of mining operations at the Northern Tier Mine, 600,000 tons of ore were mined, of which 40,000 tons were sold.

a. Prepare a journal entry to record depletion during the year. (Omit the "$" sign in your response.)

General Journal Debit Credit

b.

Show how the Northern Tier Mine, and its accumulated depletion, would appear in Salter Mining Company's balance sheet after the first year of operations. (Input all amounts as positive values. Omit the "$" sign in your response.)

Property, plant, & equipment

$

$

Explanation / Answer

The following formula is how you calculate depletion expense if everything that was extracted was also sold in the same period.

Depletion Expense =

Cost ? Salvage Value

Depletion Expense =

Cost ? Salvage Value

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