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Depletion Rate Oxford Quarries purchased 45 acres of land for $185,000. 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 $11,150. During 2019, Oxford extracted 8,500 tons of stone. Required: 1. Compute the depletion rate per ton. 2. Prepare the journal entry to record the extraction of the stone.

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 7, Problem 65E
Textbook Problem

Depletion Rate

Oxford Quarries purchased 45 acres of land for $185,000. 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 $11,150. During 2019, Oxford extracted 8,500 tons of stone.

Required:

1. Compute the depletion rate per ton.

2. Prepare the journal entry to record the extraction of the stone.

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Chapter 7 Solutions

Cornerstones of Financial Accounting
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