MacLean Corp purchased a mine on January 1, 2016, for $500,000
The mine is estimated to contain 30,000 tons of iron ore. There is no residual value. The business has extracted and sold 2,500 tons of ore in 2016. Prepare the journal entry to record depletion expense for 2016. (Round your intermediate calculations to the nearest cent.)
What will be an ideal response
Depletion Expense—Mine 41,675
Accumulated Depletion—Mine 41,675 .Depletion per unit = (Cost - Residual value) / Estimated total units
Depletion per unit = ($500,000 - $0 ) / 30,000 = $16.67 per ton
Depletion expense = Depletion per unit x Number of units extracted
Depletion expense for year 2016 = $16.67 x 2,500 tons = $41,675
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