Question

On July 23 of the current year, Dakota Mining Co. pays $7,412,400 for land estimated to contain 8,520,000 tons of recoverable ore. It installs machinery costing $1,278,000 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 436,250 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) To record the purchase of the land.

(b) To record the cost and installation of machinery.

(c) To record the first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.

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

• Record the cost of the ore mine of $7,412,400 cash.

Note: Enter debits before credits.

	Date General Journal Debit Credit Jul 23

• Record the cost of the machinery of $1,278,000 cash.

Note: Enter debits before credits.

	Date General Journal Debit Credit Jul 25

To record the first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.

	Select formula for Units of Production Depletion: Calculate depletion expense: Depletion per ton Tonnage Depletion expense

• 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

• To record the first five months' depreciation on the machinery.

  	Select formula for Units of Production Depreciation: Calculate Depreciation expense: Depreciation per ton Tonnage Depreciation expense

To record depreciation of the machine at December 31.

Journal entry worksheet

• Record the year-end adjusting entry for the depreciation expense of the machinery.

Note: Enter debits before credits.

	Date General Journal Debit Credit Dec 31

Answer 1

a)

Date	General Journal	Debit	Credit
Jul 23	Mineral deposit	$7412400
	Cash		$7412400
	(To record purchase of land)

b)

Date	General Journal	Debit	Credit
Jul 25	Machinery	$1278000
	Cash		$1278000
	(To record the cost and installation of machinery)

c)

Select formula for Units of Production Depletion:
(Cost-Salvage value)/Expected units to be produced
Calculate depletion expense:
Depletion per ton ($7412400/8520000)	$0.87
Tonnage	436250
Depletion expense	$379538

Date	General Journal	Debit	Credit
Dec 31	Depletion expense- Mineral deposit	$379538
	Accumulated depletion		$379538
	(To record the first five months depletion on the land)

d)

Select formula for Units of Production Depreciation:
(Cost-Salvage value)/Expected units to be produced
Calculate Depreciation expense:
Depreciation per ton ($1278000/8520000)	$0.15
Tonnage	436250
Depreciation expense	$65438

Date	General Journal	Debit	Credit
Dec 31	Depreciation expense- Machinery	$65438
	Accumulated depreciation		$65438
	(To record the first five months depreciation on the machinery)

NOTE:- Please rate the answer and for any problem regarding the answer please ask in the comment section.