Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. Ifnosalvage value is expected and 2 million tons are mined in the first year, the entry to record depletion willinclude aO a.Debit to inventory of $1,200,000O b.Debit to accumulated depletion of $2,000,000Oc.Credit to accumulated depletion of $2,000,000Od.Credit to depletion expense of $1,200,000

Maggie Sharrer company expects to extract 20 million tons of coal from a mine that cost $12 million.…

Answered: e value is expected and 2 million to e…

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Accounting

e value is expected and 2 million to e a Debit to inventory of $1,200,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. Ifno
salvage value is expected and 2 million tons are mined in the first year, the entry to record depletion will
include a
O a.
Debit to inventory of $1,200,000
O b.
Debit to accumulated depletion of $2,000,000
Oc.
Credit to accumulated depletion of $2,000,000
Od.
Credit to depletion expense of $1,200,000

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