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 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 $11,000. During 2019, Oxford extracted 8,000 tons of stone.

Required:

1.Compute the depletion rate per ton. Round your answer to the nearest cent and use the rounded value for any following calculations.

______________ per ton

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

2019, Dec. 31

Inventory

Accumulated Depletion

Record depletion