Saskatchewan Forestry Company purchased a timber tract for $600,000 and estimates that it will be depleted evenly over its 10-year useful life with no residual value. Prepare the journal entry that would be recorded if 10 percent of the total timber is cut and placed into inventory during the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Question

Willow Rodriguez

Business

18 November, 02:14

Saskatchewan Forestry Company purchased a timber tract for $600,000 and estimates that it will be depleted evenly over its 10-year useful life with no residual value. Prepare the journal entry that would be recorded if 10 percent of the total timber is cut and placed into inventory during the current year. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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Answers (1)

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Jonathan · Answer 1

The journal entry is shown below.

Explanation:

According to the scenario, the journal entry for the given data are as follows:

Journal Entry.

Inventory A/c Dr. $60,000

To, Timber Tract A/c. $60,000

(Being 10% of total timber placed into inventory is recorded)

Computation:

Purchased amount = $600,000

Percent = 10%

So, Inventory = $600,000 * 10%

= $60,000