On December 31, 2019, a silver mining company purchased mineral rights for $3,200,000. An additional $4,000,000 was spent developing the mine. The mine is expected to remain open for the next 20 years with a total estimated output of 2,500,000 ounces of silver. At the end of its useful life, the mine will have to be decommissioned at an expected cost of $2,900,000. The relevant discount rate is 6%. The company uses the units of production method of depreciation. The silver output in 2020 was 68,000 ounces.

Required

a) Prepare all journal entries for the years ended Dec 31, 2019 and 2020.

b) The mining operations ceased on December 31, 2031. A total of 2,150,000 ounces of silver was mined to the end of December 31, 2030. A total of 165,000 ounces were mined during the year ended December 31, 2031. Write all journal entries at December 31, 2031.