Accounting for Natural Resources On May 31, 2007, Barren Oil Company purchased an oil well, with estimated reserves of 200,000 barrels of oil, for $2.0 million cash.

Required:

Prepare journal entries for the following:

1. Record the purchase of the oil well.

2. During 2007, 16,000 barrels of oil were extracted from the well. Record the depletion expense for 2007.

3. During 2008, 21,000 barrels of oil were extracted from the well. Record the depletion expense for 2008.