Answer:
Depletion expense A/c Dr $84,525
To Accumulated depletion A/c
(Being the depletion expense for the first year is recorded)
Explanation:
The journal entry is presented below:
Depletion expense A/c Dr $84,525
To Accumulated depletion A/c
(Being the depletion expense for the first year is recorded)
The computation is shown below
First we have to compute the depletion per ton which is calculated below:
= (Acquired cost of coal mine + Intangible development costs + fair value of the obligation - Sale value) ÷ (Number of estimated tons of coal extracted)
= ($460,000 + $115,000 + $92,000 - $184,000) ÷ (4,600 tons)
= $105
Now if 805 tons are extracted in first year, so the depletion would be
= 805 tons × $105
= $84,525
