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padilas [110]
3 years ago
14

On July 23 of the current year, Dakota Mining Co. pays $7,147,920 for land estimated to contain 9,048,000 tons of recoverable or

e. It installs machinery costing $1,900,080 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 466,500 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.):
Business
1 answer:
Korolek [52]3 years ago
3 0

Answer:

ore deposits     7,147,920 debit

           cash                  7,147,920 credit

--to record purchase of land with ore deposit--

machinery         1,900,080 debit

        account payable       1,900,080 credit

Account payable 1,900,080 debit

            Cash                      1,900,080 credit

--to record machine installation and payment of it 2 days later--

depletion expense          368,535

depreciation expense       97,965

ore deposit                                          368,535‬

equipment accumulated depreciation 97.965‬

Explanation:

the first entries are quite self-explanatory

<u>Now, to calculate the depreication and depletion:</u>

The machine will be depreciate at the same phase as the ore deposit As the asset is relate to it and will have no value after the miniming project ends.

depreciation  for the year:

466,500 / 9,048,000 x 7,147,920  = 368.535‬ ore deposit amortization

466,500 / 9,048,000 x 1,900,080 =    97.965‬ equipment depreciation

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Eastport Inc. was organized on June 5, Year 1. It was authorized to issue 300,000 shares of $10 par common stock and 50,000 shar
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Answer:

a.

Dr. Cash                                                                  $180,000

Cr. Common Stock                                                 $150,000

Cr. Add-in-Capital excess of par Common stock $30,000

Dr. Cash                                                                   $255,000

Cr. Preferred Stock                                                 $250,000

Cr. Add-in-Capital excess of par Preferred stock $5,000

Dr. Cash                                                                  $900,000

Cr. Common Stock                                                 $600,000

Cr. Add-in-Capital excess of par Common stock $300,000

<u>Stockholders' equity</u>

Common Stock (150,000 + 600,000)                  $750,000

Preferred Stock                                                     $250,000

Add-in-Capital excess of par Common stock     $330,000

($30,000 + $300,000)

Add-in-Capital excess of par Preferred stock     <u>$5,000       </u>

Total stockholders' equity                                   <u>$1,335,000</u>

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a.

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Common stock = 15,000 x 10 = $150,000

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Cash receipt = 5,000 x 51 = $255,000

Common stock = 5,000 x 50 = $250,000

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Common stock = 60,000 x 10 = $600,000

Add-in-Capital excess of par Common stock = $900,000 - $600,000 = $300,000

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