On July 1, 2022, Izaak Inc. invested $910,000 in a mine estimated to have 700,000 tons of ore of uniform grade. During the last six months of 2022, 100,000 tons of ore were mined and sold.

Instructions:

1.) Prepare the journal entry to record depletion.

2.) What effect (increase, decrease, no effect) does the entry in (1) have on assets, liabilities, and stockholders'equity?

3.) Assume that the 100,000 tons of ore were mined, but only 80,000 units were sold. How are the costs applicable to the 20,000 unsold units reported?

4.) What effect would the situation described in (3) have on assets, liabilities, and stockholders' equity?