On May 31, 2010, Barren Oil Company purchased an oil well with estimated reserves of 200,000 barrels of oil for $2.0 million cash.
Required:
Prepare journal entries for the following:
1. Record the purchase of the oil well.
2. During 2010, 16,000 barrels of oil were extracted from the well. Record the depletion expense for 2010.
3. During 2011, 21,000 barrels of oil were extracted from the well. Record the depletion expense for 2011.