The Nelson Oil Company estimated that the oil reserve that it acquired in 2019 would produce 4 million barrels of oil. The company extracted 300,000 barrels the first year, 500,000 barrels in 2020, and 600,000 barrels in 2021. Nelson paid $32,000,000 for the oil reserve.

a. Compute the depletion expense for each year-2019, 2020, and 2021.

b. Prepare the journal entries to record.

(i) The acquisition of the oil reserve.

(ii) The depletion for 2019.

c. Open T-accounts and post the entries from part b in the accounts.