On July 23 of the current year, Dakota Mining Co. pays $7,279,200 for land estimated to contain 8,088,000 tons of recoverable ore. It installs machinery costing $1,132,320 that has a 10-year life and no salvage value and is capable of mining the ore deposit in eight years. The machinery is paid for on July 25, seven days before mining operations begin. The company removes and sells 414,250 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.

Record Journal Entry Worksheets

1)(Record the purchase of the land)

Record the cost of ore mines of 7,279,200 cash

2) (Record the cost and installation of machinery)

Record the cost of the machinery of 1,132,320 cash

3) To record the first five months depletion assuming the land has net salvage value of zero after the ore is mined

Calculate depletion expense

Depletion per iron
Tonnage
Depletetion expense