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Knowledge Check 02 Mountain Top, Inc., owns a coal mine with a depletion rate of $4 per ton of coal. A total of 100,000 tons were mined, but only 80,000 tons were sold during the current year. Complete the necessary journal entry by selecting the account names and dollar amounts from the drop-down menus. Date Account Title Debit Credit Dec. 31

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Answer:

Explanation:

The journal entry is shown below:

Depletion expense A/c Dr $320,000

Coal inventory A/c $80,000

     To Accumulated depletion $400,000

(Being the entry is recorded)

The computations are shown below:

1. For Depletion expense

= 80,000 tons × $4 per ton of coal

= $320,000

2. For accumulated depreciation

= 100,000 tons × $4 per ton of coal

= $400,000

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