Depletion Rate Oxford Quarries purchased 45 acres of land fo

Depletion Rate Oxford Quarries purchased 45 acres of land for $225,000. The land contained stone that Oxford will remove from the ground, finish, and then sell as facing material for buildings. Oxford spent $435,000 preparing the quarry for operation. Oxford estimates that the quarry contains 55,000 tons of usable stone and that it will require 6 years to remove all the usable stone once quarrying begins. Upon completion of quarrying, Oxford estimates that the land will have a residual value of $11,000. During 2019, Oxford extracted 8,400 tons of stone. Required: 1. Compute the depletion rate per ton. Round your answer to the nearest cent and use the rounded value for any following calculations per ton Feedback ? Check My Work 1. The cost of a natural resource includes all costs necessary to ready the natural resource for separation from the earth. Depletion is similar to the unit production method of depreciation 2. Prepare the journal entry to record the extraction of the stone. 2019, Dec. 31 Inventory Accumulated Depletion Record depletion Previous Check My Work 7/8/2018

Solution

Cost of Quarries land 225000 Add: Cost incurred for preparation 435000 Less: residual value 11000 Depreciable amount 649000 Divide: Total Tons of stones 55000 Depletion per ton 11.8 Tons extracted during the year 8400 Depletion expense (8400*11.80) 99120 Req a: Depletion expense: $ 11.80 per ton Req b: 31-Dec Inventory Account Dr. 99120     Accumulated depletion 99120