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.

The journal entry is shown below:

Depletion expense A/c Dr $475,333

To Accumulated depletion A/c $475,333

(Being depletion expense is recorded)

The computation is shown below:

= Cost of oil well : number of barrels hold * number of barrels extracted

= $1,782,500 : 150,000 * 40,000

= $475,333

Simply we debited the depletion expense account and credited the accumulated depletion account