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Last year, Mountain Top, Inc., purchased a coal mine at a cost of $900,000. The salvage value has been estimated at $100,000. The coal mine has an estimated 200,000 tons of available coal. A total of 70,
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16 votes
16 votes
Last year, Mountain Top, Inc., purchased a coal mine at a cost of $900,000. The salvage value has been estimated at $100,000. The coal mine has an estimated 200,000 tons of available coal. A total of 70,000 tons were mined and sold during the current year.

Required:
Wrie the necessary adjusting journal entry to record depletion expense.

User Matousc
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1 Answer

13 votes
13 votes

Answer: See explanation

Step-by-step explanation:

Following the information given in the question, the adjusting journal entry to record depletion expense will be:

Debit Depletion expense - Coal deposit = $280,000

Credit Accumulated Depletion - Coal Deposit = $280,000

Note that the depletion expense was calculated as:

= ($900000 - $100000) / 200000] × 70000

= $280000

User Yevhen Bobrov
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3.2k points
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