An oil well cost $1,832,500 and is calculated to hold 160,000 barrels of oil
There is no residual value. Which journal entry is needed to record the expense for the extraction of 37,000 barrels of oil during the year? All 37,000 barrels were sold ding the year. (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
A)
Cost of Goods Sold - Oil 423,650
Accumulated Depletion - Oil 423,650
B)
Depletion Expense - Oil 423,650
Oil Revenue 423,650
C)
Depletion Expense - Oil 423,650
Accumulated Depletion - Oil 423,650
D)
Oil Reserve Inventory 423,650
Accumulated Depletion - Oil 423,650
C .Depletion per unit = (Cost - Residual value) / Estimated total units
Depletion per unit = ($1,832,500 ) / 160,000
Depletion per unit = $11.45
Depletion expense = Depletion per unit x Number of units extracted
Depletion expense = $11.45 x 37,000
Depletion expense = $423,650
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