Reference no: EM132709797

Question - 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.

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