An Oil Well Cost $1,782,500 and Is Calculated to Hold

question 50

Multiple Choice

An oil well cost $1,782,500 and is calculated to hold 150,000 barrels of oil.There is no residual value.Which journal entry is needed to record the expense for the extraction of 40,000 barrels of oil during the year? All 40,000 barrels were sold during the year.(Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Cost of Goods Sold - Oil Reserve } & 475,200 & \\
• \hline \text { Accumulated Depletion - Oil Reserve } & & 475,200 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Depletion Expense - Oil Reserve } & 475,200 & \\
• \hline \text { Oil Revenue } & & 475,200 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Depletion Expense - Oil Reserve } & 475,200 & \\
• \hline \text { Accumulated Depletion - Oil Reserve } & & 475,200 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Oil Reserve Inventory } & 475,200 & \\
• \hline \text { Accumulated Depletion - Oil Reserve } & & 475,200 \\
• \hline
• \end{array}\]

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Definitions:

Gantt Chart

A visual project management tool that displays tasks or activities against time, showing project schedules, durations, and dependencies.

Series of Events

A series of events is a sequence of occurrences, actions, or activities that are related or connected in some manner, often leading to a particular outcome.

Graphics

Visual elements such as images, charts, and diagrams used to represent information or data.

Gantt Chart

A visual project management tool that displays tasks or activities against time.