Green Mining paid $500,000 to acquire a mine with 25,000 tons of coal reserves. The following statements model reflects Green Mining financial condition just prior to purchasing the coal reserves. The company extracted 12,000 tons of coal in year 1 and 15,000 tons in year 2.
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Required:
a. Compute the depletion charge per unit.
b. Record the acquisition of the coal reserves and the depletion expense for years 1 and 2 in a financial statementsmodel like the preceding one.
c. Prepare the general journal entries to record the depletion expense for years 1 and 2.