Question

An oil field is purchased for $6,000,000. No salvage value is expected. The estimated recoverable amount of oil is 250,000 barrels. During the year just ended, 27,000 barrels of oil were extracted and sold.

Required:
1. Compute the depletion rate. Show your computations.
Depletion Rate $per barrel
2. Prepare the journal entry to recognize the depletion at the end of the year. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:The estimated recoverable amount of oil is 250,000 barrels. During the year just ended, 27,000 barrels of oil were extracted and sold. Required: 1. Compute

Step-by-step explanation: