alberta petroleum holds huge reserves of oil assets. assume that at the end of 2025, alberta petroleums cost…

alberta petroleum holds huge reserves of oil assets. assume that at the end of 2025, alberta petroleums cost of oil reserves totaled $72,000,000,000, representing 9,000,000,000 barrels of oil\nrequirements\n1. which method does alberta petroleum use to compute depletion?\n2. suppose alberta petroleum removed and sold 500,000,000 barrels of oil during 2026. journalize depletion expense for 2026\nrequirement 1. which method does alberta petroleum use to compute depletion?\nunits of production is the method used to compute depletion\nrequirement 2. suppose alberta petroleum removed and sold 500,000,000 barrels of oil during 2026. journalize depletion expense for 2026. (assume no residual value. record debits first\nthan credits. select the explanation on the last line of the journal entry table.)

alberta petroleum holds huge reserves of oil assets. assume that at the end of 2025, alberta petroleums cost of oil reserves totaled $72,000,000,000, representing 9,000,000,000 barrels of oil\nrequirements\n1. which method does alberta petroleum use to compute depletion?\n2. suppose alberta petroleum removed and sold 500,000,000 barrels of oil during 2026. journalize depletion expense for 2026\nrequirement 1. which method does alberta petroleum use to compute depletion?\nunits of production is the method used to compute depletion\nrequirement 2. suppose alberta petroleum removed and sold 500,000,000 barrels of oil during 2026. journalize depletion expense for 2026. (assume no residual value. record debits first\nthan credits. select the explanation on the last line of the journal entry table.)

Answer

Explanation:

Step1: Calculate depletion per barrel

Depletion per barrel = $\frac{\text{Cost of oil reserves}}{\text{Total barrels of oil reserves}}$ Given cost of oil reserves = $72,000,000,000$ and total barrels of oil reserves = $9,000,000,000$ Depletion per barrel = $\frac{72000000000}{9000000000}=8$

Step2: Calculate depletion expense for 2026

Depletion expense = Depletion per barrel × Barrels removed and sold Barrels removed and sold = $500,000,000$ Depletion expense = $8\times500000000 = 4,000,000,000$

Step3: Journalize the depletion expense

Date Accounts and Explanation Debit Credit
2026 Depletion Expense - Oil Reserves $4,000,000,000$
Accumulated Depletion - Oil Reserves $4,000,000,000$
(To record depletion expense for 2026)

Answer:

The journal entry for depletion expense in 2026 is as shown above.