Billings Corporation acquires a coal mine at a cost of $2,000,000. Intangible development costs total $275,000. After extraction has occurred, Billings must restore the property (estimated fair value of the obligation is $305,000), after which it can be sold for $750,000. Billings estimates that 5,000 tons of coal can be extracted. If 900 tons are extracted the first year, which of the following would be included in the journal entry to record depletion? a.) Debit to Inventory for $329,400 b.) Credit to Accumulated Depletion for $1,500,600 c.) Debit to Accumulated Depletion for $329,400 d.) Credit to Inventory for $135,000

College Accounting, Chapters 1-27
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ISBN:9781337794756
Author:HEINTZ, James A.
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Chapter18: Accounting For Long-term Assets
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Billings Corporation acquires a coal mine at a cost of $2,000,000. Intangible development costs total $275,000. After extraction has occurred, Billings must restore the property (estimated fair value of the obligation is $305,000), after which it can be sold for $750,000. Billings estimates that 5,000 tons of coal can be extracted. If 900 tons are extracted the first year, which of the following would be included in the journal entry to record depletion?


a.) Debit to Inventory for $329,400
b.) Credit to Accumulated Depletion for $1,500,600
c.) Debit to Accumulated Depletion for $329,400
d.) Credit to Inventory for $135,000
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