On July 23 of the current year, Dakota Mining Co. pays $6,355,200 for land estimated to contain 7,944,000 tons of recoverable ore. It installs machinery costing $1,588,800 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 409,250 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. View transaction list Journal entry worksheet Record the cost of the ore mine of $6,355,200 cash Note: Enter debits before credits. Date General Journal Debit Credit July 23 Record entry Clear entry View general journal
a.
July 23 Mineral Deposit ............................................... 6,355,200
Cash ............................................................ 6,355,200
To record purchase of mineral deposit.
b.
July 25 Machinery ......................................................... 1,588,800
Cash ............................................................ 1,588,800
To record costs of machinery.
c.
Dec. 31 Depletion Expense—Mineral Deposit ........... 327,400
Accum. Depletion—Mineral Deposit....... 327,400
To record depletion [$6,355,200/ 7,944,000 tons = $0.80 per ton. 409,250 tons x $0.80 = $327,400].
d.
Dec. 31 Depreciation Expense—Machinery............... 81,850
Accum. Depreciation—Machinery .......... 81,850
To record depreciation [$1,588,800/ 7,944,000 tons = $0.20 per ton. 409,250 tons x $0.20 = $81,850].
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