Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 1,860,000 tons are extracted and sold during the first year,the entry to record depletion expense will include

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Quizplus · Accepted Answer

The depletion expense is calculated by dividing the total cost of the gravel pit by the estimated total tons of gravel to be extracted, then multiplying by the actual tons extracted during the year. This results in ($5,000,000 / 10,000,000 tons) * 1,860,000 tons = $930,000. Therefore, the correct entry is a debit to Depletion Expense and a credit to Accumulated Depletion for $930,000.

Horshack Mining Company Purchases a Gravel Pit for $5,000,000