Exercise 10-18 Depletion of natural resources LO P1, P3

On April 2, 2017, Montana Mining Co. pays $4,348,140 for an ore deposit containing 1,400,000 tons. The company installs machinery in the mine costing $234,400, 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, 2017, and mines and sells 167,400 tons of ore during the remaining eight months of 2017. Prepare the December 31, 2017, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mines depletion. (Do not round intermediate calculations. Round your final answers to the nearest whole number.)

*these are the options:

Accumulated amortization

Accumulated depletionMineral deposit

Accumulated depreciationMachinery

Amortization expense

Building

Cash

Depletion expenseMineral deposit

Depreciation expenseMachinery

Equipment

Gain on sale of equipment

Goodwill

Impairment loss

Land

Land improvements

Leasehold improvements

Loss from fire

Loss on disposal of equipment

Loss on exchange of assets

Loss on sale of equipment

Machinery

Mineral deposit

Ore mine

Prepaid rent

Rent expense

Repairs expense

vehicles

Journal entry worksheet 2 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