Kitkan Inc. is a global producer and marketer of rolled aluminum products.
Suppose Kitkan Inc. paid $4.4 million cash for a lease giving the firm the right to work a mine that contained an estimated 400,000 tonnes of bauxite. Assume that the company paid $30,000 to remove unwanted buildings from the land and $130,000 to prepare the surface for mining. Further assume that Kitkan Inc. signed a $140,000 note payable to a landscaping company to return the land surface to its original condition after the lease ends. During the first year, Kitkan Inc. removed 37,000 tonnes of bauxite, which it sold on account for $40 per tonne.
Required
1. Make general journal entries to record all transactions related to the bauxite, including amortization and sale of the first year's production.
2. Show the accounts and amounts that would be presented on the balance sheet.