f 18,000 tons were extracted during the first year, which of the following would be included in the entry to record the depletion?
f 18,000 tons were extracted during the first year, which of the following would be included in the entry to record the depletion?
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 6CE
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Question
Penny Coal Mining acquires property at a cost of 10,000,000 and
development costs amounted to 2,400,000. After extraction has
occurred, the company must restore the property (the estimated present value of the obligation is 1,200,000), after which it can be sold for
3,400,000. The company estimates that 100,000 tons of coal can be
extracted. If 18,000 tons were extracted during the first year, which of the
following would be included in the entry to record the depletion?
a. Cr. Accumulated depletion - 3,060,000.
b. Cr. Inventory - 1,800,000
c. Dr. Accumulated depletion - 1,836,000
d. Dr. Inventory - 1,836,000
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