Favre Exploration Corporation engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities:

Jan. 1, 2008 Purchased a coal mine estimated to contain 200,000 tons of coal for \($800,000\) .

July 1, 2008: Purchased for \($1,950,000\) a tract of timber estimated to yield 3,000,000 board feet of lumber and to have a residual land value of \($150,000\) .

Feb. 1,2008: Purchased a silver mine estimated to contain 30,000 tons of silver for \($750,000\) .

Aug. 1, 2008: Purchased for \($736,000\) oil reserves estimated to contain 250,000 barrels of oil, of which 20,000 would be unprofitable to pump.

Required:

a. Determine the amount of depletion expense to recognize on the 2008 income statement for each of the four reserves, assuming 62,000 tons of coal, 1,200,000 board feet of lumber, 9,000 tons of silver, and 80,000 barrels of oil are extracted.

b. Prepare the portion of the December 31, 2008, balance sheet that reports natural resources.