EX 10-19 Depletion entries

Ashwood Mining Co. acquired mineral rights for $15,000,000. The mineral deposit is estimated at 120,000,000 tons. During the current year, 24,000,000 tons were mined and sold.
a. Determine the amount of depletion expense for the current year.
b. Journalize the adjusting entry to recognize the depletion expense.

Answer:
a.
$15,000,000/120,000,000 tons = $0.125 depletion per ton
24,000,000 × $0.125 = $3,000,000 depletion expense

b.
Depletion Expense......................................................... 3,000,000    
Accumulated Depletion ...........................................  3,000,000  
Depletion of mineral deposit.

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