A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore. When mining is complete, the property will have no salvage value. In Year 1, it mined and sold 857,000 tons of ore. Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.
What will be an ideal response?
$1,837,500/7,350,000 tons = $0.25 per ton
Year 1: 857,000 tons * $0.25 per ton = $214,250
| Depletion Expense……………… | 214,250 |
| Accumulated Depletion………. | 214,250 |
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