An oil well cost $1,832,500 and is calculated to hold 160,000 barrels of oil. there is no residual value. which journal entry is needed to record the expense for the extraction of 37,000 barrels of oil during the year? all 37,000 barrels were sold ding the year. (round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)

The cost of the oil well = $ 1,832,500

The total barrels of oil it will hold = 160,000 barrels

First, we will calculate the cost of holding 1 barrel.

The cost of holding 1 barrel = Cost of well ÷ Total barrels

The cost of holding 1 barrel = $ 1,832,500 ÷ 160,000 barrels = $ 11.45 per barrel

The barrels sold during the year = 37,000

So, the depletion expense will = 37,000 barrels × $ 11.45

Depletion expense = $ 423,765.63 or $ 423,766

Thus, the Journal entry will be -

Depletion Expense Dr $ 423,766

Accumulated Depletion Cr $ 423,766.

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