I am having problems with this question. can anyone help me On April 2, 2011, Id

Question

I am having problems with this question. can anyone help me

On April 2, 2011, Idaho Mining Co. pays $4,806,250 for an ore deposit containing 1,574,000 tons. The company installs machinery in the mine costing $170,700, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Idaho begins mining on May 1, 2011, and mines and sells 169,500 tons of ore during the remaining eight months of 2011.

Prepare the December 31, 2011, entries to record the ore deposit depletion and then the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine%u2019s depletion. (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

On April 2, 2011, Idaho Mining Co. pays $4,806,250 for an ore deposit containing 1,574,000 tons. The company installs machinery in the mine costing $170,700, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Idaho begins mining on May 1, 2011, and mines and sells 169,500 tons of ore during the remaining eight months of 2011.

Explanation / Answer

Hi,

Please find the answer as follows:

Depletion Rate = 4806250/1574000 = 3.05

Depreciation Rate = 170700/1574000 = .11

Depletion Value for 2011 = 169500*3.05 = 516975

Depreciation Value for 2011 = 169500*.11 = 18645

Journal Entries

Depletion expense-mineral deposit Dr. 516975
Accumulated depletion-mineral deposit Cr. 516975

Depreciation Expense--Machinery Dr. 18645
Accumulated Depreciation--Machinery Cr. 18645

Thanks.

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