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Brandon Corporation Purchased a Vein of Mineral Ore for $3,250,000

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Essay

Brandon Corporation purchased a vein of mineral ore for $3,250,000. It is estimated that 15,000,000 tons
of ore are available to be extracted. The residual value is determined to be $400,000. What is the depletion expense for this year's extraction of 1,760,000 tons of ore (rounded to the nearest dollar)? What is the journal entry?


Definitions:

Par Value

The face value of a stock or bond as designated by the issuer, which has little relation to its market value but is important for accounting purposes.

Investing Activities

Financial activities related to the acquisition or sale of long-term assets and investments.

Bonds Payable

Long-term debt securities issued by a corporation or government entity, promising to pay the holder a specified amount of interest over a specified period and to repay the principal at maturity.

Net Cash

The amount of cash after subtracting cash outflows from cash inflows.

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