An oil well cost $2,050,000 and is calculated to hold 290,000 barrels of oil.There is no residual value.Which journal entry is needed to record the expense for the extraction of 53,000 barrels of oil during the year? All 53,000 barrels were sold during the year.(Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar. )

Question

Quizplus · Accepted Answer

Depletion per unit = (Cost - Residual value)/ Estimated total units
Depletion per unit = ($2,050,000)/ 290,000
Depletion per unit = $7.07 per unit
Depletion per unit = Depletion expense = Depletion per unit × Number of units extracted
Depletion expense = $7.07 × 53,000
Depletion expense = $374,710

An Oil Well Cost $2,050,000 and Is Calculated to Hold