Horshack Mining Company Purchases a Gravel Pit for $5,000,000

question 214

Multiple Choice

Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 2,000,000 tons are extracted during the first year but only 1,440,000 tons are sold,what amount should be recorded for Gravel Inventory and Depletion Expense,respectively?

• A)$280,000 and 720,000
• B)$720,000 and $280,000
• C)$720,000 and 720,000
• D)$280,000 and $1,000,000