A company pays S836,000 cash to acquire an iron mine on January 1. At that same time, it incurs additional costs of $66,000 cash toaccess the mine, which is estimated to hold 110,000 tons of iron. The estimated value of the land after the iron is removed is $22,000.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)1. Prepare the January 1 entry to record the cost of the iron mine.2 Prepare the December 31 year-end adjusting entry if 23,000 tons of iron are mined but only 20,000 tons are sold this first year.Answer is not complete.NoDateGeneral JournalDebitCreditJanuary 01Iron Mine902,000Cash902.000December 31Depletion expense-Iron Mine164,000Iron Inventory

Formula: Value of unsold mine = Total unsold mine tons x Per ton price

Answered: A company pays $836,000 cash to acquire…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Montana Mining Company pays $4,771,370 for an ore deposit containing 1,502,000 tons. The company installs machinery in the mine costing $214,200. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells 150,100 tons of ore during the year. Prepare the December 31 year-end entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine's depletion. Note: Do not round intermediate calculations. Round your final answers to the nearest whole number. View transaction list Journal entry worksheet Credit View general Journal
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Kelly Company acquired an iron mine for $2,349,000. Kelly paid a $1,000 filing fee with the county recorder, $50,000 license fee to the state, and $100,000 for a geologic survey. It was estimated that the land would have a value of $400,000 after completion of the mining operations, and that 1,000,000 tons of iron ore could be extracted from the mine. During the first year of operations, 100,000 tons of iron ore were extracted and 80,000 tons of iron ore were sold for $5 per ton. How much gross profit is shown on the Income Statement for the current period? What is the amount of depletion to record in the current period?

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