Answer:
Dr Depletion expense 87,465
Cr Accumulated depletion, coal mine 87,465
Explanation:
total depreciable costs = $476,000 + $119,000 + $95,200 - $190,400 = $499,800
depletion rate = $499,800 / 4,760 tons of coal = $105 per ton of coal
depletion expense during year 1 = $105 per ton x 833 tons = $87,465
Depletion expense is similar to depreciation expense, and is primarily used by extracting companies, e.g. mines, oil companies. Accumulated depletion decreases the book value of the asset.
