On April 2, 2016, Montana Mining Co. pays $3,186,560 for an ore deposit containi

Question

On April 2, 2016, Montana Mining Co. pays $3,186,560 for an ore deposit containing 1,571,000 tons. The company installs machinery in the mine costing $158,600, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Montana begins mining on May 1, 2016, and mines and sells 174,800 tons of ore during the remaining eight months of 2016 Prepare the December 31, 2016, 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. (Do not round intermediate calculations. Round your final answers to the nearest whole number.) View transaction list Journal entry worksheet 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 Record entry Clear entry View general journal

Explanation / Answer

Date General Journal Debit Credit Dec 31 Depletion expense—Mineral deposit[($3,186,560 / 1,571,000) * 174,800] $354,558 Accumulated depletion—Mineral deposit $354,558 Dec. 31 Depreciation expense—Machinery[($158,600  / 1,571,000) * 174,800] $17,647 Accumulated depreciation—Machinery $17,647

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