A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. If 150,000 tons of ore are mined during the first year, the journal entry to record the depletion is:
A. Debit Depletion Expense $112,500; credit Accumulated Depletion $112,500.
B. Debit Cash $93,750; credit Accumulated Depletion $93,750.
C. Debit Cash $112,500; credit Natural Resources $112,500.
D. Debit Depletion Expense $93,750; credit Natural Resources $93,750.
E. Debit Depletion Expense $93,750; credit Accumulated Depletion $93,750.
Answer: E
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