A company pays $760,000 cash to acquire an iron mine on January 1. At that same time, it incurs additional costs of $60,000 cash to access the mine, which is estimated to hold 100,000 tons of iron. The estimated value of the land after the iron is removed is $20,000.
1. Prepare the January 1 entry to record the cost of the iron mine.
2. Prepare the December 31 year-end adjusting entry if 20,000 tons of iron are mined but only 18,000 tons are sold this first year.