On April 2, 2017, Montana Mining Co. pays $4,487,940 for an ore deposit containi

Question

On April 2, 2017, Montana Mining Co. pays $4,487,940 for an ore deposit containing 1,448,000 tons. The company installs machinery in the mine costing $179,200, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is of 2017 completely mined. Montana begins mining on May 1, 2017, and mines and sells 168,700 tons of ore during the remaining eight months 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.) View transaction list 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

Explanation / Answer

Adjusting entries:

Date General journal Debit Credit Dec 31 Depletion expense-Mineral deposit {(4,487,940/1,448,000)×168,700} $522,870 Accumulated depletion-Mineral deposit $522,870 Dec 31 Depriciation expense-Machinery{(179200/1,448,000)×168700} $20,878 Accumulated Depriciation-Machinery $20,878

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