The Collier Coal Company purchased mining property for $6,400,000 in cash.

The Collier Coal Company purchased mining property for $6,400,000 in cash. It was estimated that the property contained 300,000 tons of recoverable coal and that the land would have a value of $400,000 after the coal had been extracted. During the first year of operations, 35,000 tons of coal were recovered, of which 25,000 tons were sold. Prepare entries to record the purchase of the property and to recognize the cost of coal extracted and sold during the year.

 

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