Blue

Mountain Mining paid

$432,400

for the right to extract mineral assets from a

350,000-ton

deposit. In addition to the purchase price,

Blue

also paid a

$300

filing fee, a

$2,300

license fee to the state of Nevada, and

$90,000

for a geological survey of the property. Because

Blue

purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year,

Blue

removed and sold

70,000

tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Begin by journalizing (a) the purchase of the minerals (debit Mineral asset). (Do not record payment for any additional costs associated with the minerals. We will do this in entry b.)