Question

Montana Mining Co. pays $3,055,610 for an ore deposit containing 1,478,000 tons. The company installs machinery in the mine costing $203,500, which will be abandoned when the ore is completely mined. Montana mines and sells 144,100 tons of ore during the year.

Answer 1

Answer:

Question "Prepare the year-end 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. (Round your unit depreciation and depletion rates to 2 decimal places.)"

                                 Year End Journal Entries

Date    Account Titles and Explanation            Debit       Credit

             Depletion charges (Ore deposit)      $297,912

                    Accumulated depreciation                            $297,912

             (3,055,610/1,478,000 *144,100)

              Depreciation expenses(Machinery)   $19,841

                     Accumulated depreciation                            $19,841

              (203,500/1,478,000 *144,100)