On July 1, 2017, Friedman Inc. invested $689,920 in a mine estimated to have 784,000 tons of ore of uniform grade. During the last 6 months of 2017, 121,000 tons of ore were mined.
Calculate depletion cost per unit.
Prepare the journal entry to record depletion.
Calculate depletion cost per unit.
Cost (a) $689,920
Units estimated (b) 784,000 tons
Depletion cost per unit [(a) ÷ (b)] $0.88
Cost (a) $689,920
Units estimated (b) 784,000 tons
Depletion cost per unit [(a) ÷ (b)] $0.88
Prepare the journal entry to record depletion.
Inventory Debit $106,480
Accumulated Depletion credit(121,000 × $0.88) = $106,480
Accumulated Depletion credit(121,000 × $0.88) = $106,480
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