Author Question: SML International owns an oil field that contains an estimated 10,000,000 barrels of oil. The oil ... (Read 62 times)

sammy · **on:** Jul 5, 2018

SML International owns an oil field that contains an estimated 10,000,000 barrels of oil. The oil field was acquired at a cost of 35,000,000 and has no salvage value.

In 2011, 1,000,000 barrels were produced and in 2012, 1,750,000 barrels were produced. How much depletion expense should be recorded in 2011 and 2012?
What will be an ideal response?

Question 2

The sum of the money on hand and petty cash receipts in a petty cash fund will always be equal to the balance inthe petty cash account.
a. True
b. False

Indicate whether the statement is true or false

johnpizzaz · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

35 million / 10 million barrels = 3.50 depletion per barrel
2011 = 3.50 X 1 million = 3,500,000 depletion expense
2012 = 3.50 X 1.75 million = 6,125,000 depletion expense

Answer to Question 2

False