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An oil well cost​ $1,782,500 and is calculated to hold​ 150,000 barrels of oil. There is no residual value. Which journal entry is needed to record the expense for the extraction of​ 40,000 barrels of oil during the​ year? All​ 40,000 barrels were sold during the year.

User Masterpiga
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1 Answer

3 votes

Answer:

Step-by-step explanation:

The journal entry is shown below:

Depletion expense A/c Dr $475,333

To Accumulated depletion A/c $475,333

(Being depletion expense is recorded)

The computation is shown below:

= Cost of oil well ÷ number of barrels hold × number of barrels extracted

= $1,782,500 ÷ 150,000 × 40,000

= $475,333

Simply we debited the depletion expense account and credited the accumulated depletion account

User Aromanarguello
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