Computing and recording depletion expenseEcru Sand and Gravel paid 5600,000 to acquire 800...

Computing and recording depletion expense

Ecru Sand and Gravel paid 5600,000 to acquire 800,000 cubic yards of sand reserves. The following statements model reflects Ecru’s financial condition just prior to purchasing the sand reserves. The company extracted 420,000 cubic yards of sand in year 1 and 360,000 cubic yards in year 2.

Required

a. Compute the depletion charge per cubic yard.

b. Record the acquisition of the sand reserves and the depletion expense for years 1 and 2 in a financial statements model like the preceding one.

c. Prepare the general journal entries to record the depletion expense for years 1 and 2.