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 six 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 the current year, Oxford extracted 8,500 tons of stone.

Required:

. Compute the depletion rate per ton.

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

Exercise