Prepare journal entries for the above transactions.

jounral

prepare junral

16. The Mles od Compenr incurred the follewing cents and had the aber trasoctiond method of actsurtine. sots a. Pad s106,000 for cac cobth during the yrar. 1) Ademp inase -1.000 acrw \& 160 per acre bonus, oher achubicon chet. i3.900. of 130.000 13. 600. propertes acqures by wien. a. Paid 35,060 in ebuti te maimum letse nhe land rectrat in 2006. kath, pod s36,600 to mucceufully defend a stie wut conceming the Crave linan. e. Pad the following cout in cohnection we Grove 61 : Lococen and rowd praporition prior ta sudding-in the wall +4,000 Surtace tamagen Surtace cicing 2, , bee Conkidecter fecidarned rate .375,100 Equgmest rentus. s.sobiobo Drikey fuits 35000 Fuel. 6.900 Dnte ten ,20,006 Camenting sernicid 5,000 Rouitabout iseor. treuling and trunipertution 4,000 3500 Pase 12 at 21 Production casing . Mises Tank battery Fhw lines ard cotnections 51900 hunpeng unit motor ane accossores. se.tec Crsing hend asd taskection 6,504 Fubing Sepurating and treining equgeternt Meanuring equipgrent Downhole purp and rodi Teiting and acdaing the weil no mayor cagcai espendine was reburet kt the end ur abes, the agans maintain an alowance for impowinent at set of the cent of moguincant inases. aots. 1. Delay rertatu of 12,060 were paid on the Adinte leine, 11 , dot on the barden inabe, and 51,000 on invoniticare lewien. b. During 2006, the Adum lnane wat abusdond and throe = the mathithally ingulfiant be a very valuable lease becaute a dige prodicer aas dowowed sn atponeng and c. M year-end (2006). Me cempery had nat made a dedion is omglete ar abandos the borden mill. methed of accevating 2005 a. Dact $100,080 Nor casc covt duing the vear. 1) Adams lene-1,050 acre 9560 le mcre botut, oher movoltes intas, 11.050 of 316,060 sisoch. are considered to be inowidialy insignocast and are the frent ingopingit ingosved aroserties acquied by Mien. a. pued 55,000 in ectes to markain lease and land recors in soos, Abe, see s10,000 to succesthlly defend a tilie sut conceming the Greve inase. e. Paid the fallowing cocts in convection =ith Grove af: GMG costs to locabe a metste +3,000 Lacation asd robd zresaration mrier as spadavg-in the wen w.then Surfbce dartagen .15 bot suptace cowing 7 peot Contractor's feeldowwork rate ar aoe Eoubenent retals s3se doe Dritung fuid 35.000 Fuel 9,900 Oril ata 24.200 Cementing services . 5.90en Ranstaben laber risat Having and vanpoortatien Thet thee ta at at Protuctoon casing . 3ood Fenk bontery 11.kec Fow leses ard connectors 5,30 Bumping une motbr and acctsoriea 50.300 Coure beat and ctomectens i,son Tubing - nste Separting and leating equeciect 7, toe Miasurirg equement Dsenthoie furns asd roth 5600 Testing atd acdong 11 boe for gasin0. Ar the ent of 2005, a decivin tad noe been mate mo monoes or ahasdan maintan an mlowance for impairmate at 70s of the taet of mopiltemet inones 2006 a. belay reatak sf 42,080 were pard on the Artams lease, 51.200 an the Bocten lease. and 33.000 on inionificare baces. b. burm 2tot, the Acams wate nas abenconed and tore of the msuithete imignificart ieases icoet 18,000j =ere als atandoned, The Gorden lease in noe consoled to C at yeariend (2006). the conpany had not waoe a deokion te esmolene or atavoon the Bortet wel. mequghto: Ahepare gounal erithes tor the above tohiachins 16. The Allen Oil Company incurred the following costs and had the other transactions shown below for the years 2005 and 2006. The company uses the successful efforts method of accounting. 2005 a. Paid $100,000 for G\&G costs during the year. b. Leased acreage in three individually significant areas as follows: 1) Adams lease-1,000 acres @ $60 per acre bonus, other acquisition costs, $3,000. 2) Grove lease -800 acres @ a lease bonus of $70 per acre, and other acquisition costs of $10,000 3) Borden lease -600 acres (i $60 per acre bonus and other acquisition costs of $8,000. c. The company also leased 20 individual tracts for a total cost of $80,000. These leases are considered to be individually insignificant and are the first insignificant unproved properties acquired by Allen. d. Paid $5,000 in costs to maintain lease and land records in 2005. Also, paid $30,000 to successfully defend a title suit concerning the Grove lease. e. Paid the following costs in connection with Grove \#1: G\&G costs to locate a wellsite . . . . . ............. $3,000 Location and road preparation prior to spudding-in the well Surface damages ..........................15,000 Surface casing .............................. 7,000 Contractor's fee/daywork rate .................. 175,000 Equipment rentals ............................ $200,000 Drilling fluids .............................. 35,000 Fuel .................................... 9,000 Drill bits .................................... 20,000 Cementing services ......5,000 Roustabout labor . ........................8,000 Hauling and transportation ................... 7,500 Page 12 of 23 xto Page 12 of 23 Production casing ....................... ..0,000 Tank battery .............................11,000 Flow lines and connections . . ................ 5,500 Pumping unit motor and accessories ............ 50,000 Casing head and connections .................6,500 Tubing ....................................8,500 Separating and treating equipment . .............7,100 Measuring equipment .....................300 Downhole pump and rods ................... 5,600 Testing and acidizing ....................11,000 f. An exploratory well was drilled on the Borden lease in 2005 on a turnkey basis to 8,000 feet. The contractor's charge was paid for $400,000, which included $60,000 for casing. At the end of 2005, a decision had not been made to complete or abandon the well. No major capital expenditure was required. At the end of 2005 , the Adams lease was impaired 60% and the Borden lease by 30%. The company's policy is to maintain an allowance for impairment at 70% of the cost of insignificant leases. 2006 a. Delay rentals of $2,000 were paid on the Adams lease, $1,200 on the Borden lease, and $3,000 on insignificant leases. b. During 2006, the Adams lease was abandoned and three of the individually insignificant leases (cost $8,000 ) were aiso abandoned. The Borden lease is now considered to be a very valuable lease because a large producer was discovered on adjoining land. c. At year-end (2006), the company had not made a decision to complete or abandon the Borden well. REQUIRED: Prepare joumal entries for the above transactions. 13 23 16. The Mles od Compenr incurred the follewing cents and had the aber trasoctiond method of actsurtine. sots a. Pad s106,000 for cac cobth during the yrar. 1) Ademp inase -1.000 acrw \& 160 per acre bonus, oher achubicon chet. i3.900. of 130.000 13. 600. propertes acqures by wien. a. Paid 35,060 in ebuti te maimum letse nhe land rectrat in 2006. kath, pod s36,600 to mucceufully defend a stie wut conceming the Crave linan. e. Pad the following cout in cohnection we Grove 61 : Lococen and rowd praporition prior ta sudding-in the wall +4,000 Surtace tamagen Surtace cicing 2, , bee Conkidecter fecidarned rate .375,100 Equgmest rentus. s.sobiobo Drikey fuits 35000 Fuel. 6.900 Dnte ten ,20,006 Camenting sernicid 5,000 Rouitabout iseor. treuling and trunipertution 4,000 3500 Pase 12 at 21 Production casing . Mises Tank battery Fhw lines ard cotnections 51900 hunpeng unit motor ane accossores. se.tec Crsing hend asd taskection 6,504 Fubing Sepurating and treining equgeternt Meanuring equipgrent Downhole purp and rodi Teiting and acdaing the weil no mayor cagcai espendine was reburet kt the end ur abes, the agans maintain an alowance for impowinent at set of the cent of moguincant inases. aots. 1. Delay rertatu of 12,060 were paid on the Adinte leine, 11 , dot on the barden inabe, and 51,000 on invoniticare lewien. b. During 2006, the Adum lnane wat abusdond and throe = the mathithally ingulfiant be a very valuable lease becaute a dige prodicer aas dowowed sn atponeng and c. M year-end (2006). Me cempery had nat made a dedion is omglete ar abandos the borden mill. methed of accevating 2005 a. Dact $100,080 Nor casc covt duing the vear. 1) Adams lene-1,050 acre 9560 le mcre botut, oher movoltes intas, 11.050 of 316,060 sisoch. are considered to be inowidialy insignocast and are the frent ingopingit ingosved aroserties acquied by Mien. a. pued 55,000 in ectes to markain lease and land recors in soos, Abe, see s10,000 to succesthlly defend a tilie sut conceming the Greve inase. e. Paid the fallowing cocts in convection =ith Grove af: GMG costs to locabe a metste +3,000 Lacation asd robd zresaration mrier as spadavg-in the wen w.then Surfbce dartagen .15 bot suptace cowing 7 peot Contractor's feeldowwork rate ar aoe Eoubenent retals s3se doe Dritung fuid 35.000 Fuel 9,900 Oril ata 24.200 Cementing services . 5.90en Ranstaben laber risat Having and vanpoortatien Thet thee ta at at Protuctoon casing . 3ood Fenk bontery 11.kec Fow leses ard connectors 5,30 Bumping une motbr and acctsoriea 50.300 Coure beat and ctomectens i,son Tubing - nste Separting and leating equeciect 7, toe Miasurirg equement Dsenthoie furns asd roth 5600 Testing atd acdong 11 boe for gasin0. Ar the ent of 2005, a decivin tad noe been mate mo monoes or ahasdan maintan an mlowance for impairmate at 70s of the taet of mopiltemet inones 2006 a. belay reatak sf 42,080 were pard on the Artams lease, 51.200 an the Bocten lease. and 33.000 on inionificare baces. b. burm 2tot, the Acams wate nas abenconed and tore of the msuithete imignificart ieases icoet 18,000j =ere als atandoned, The Gorden lease in noe consoled to C at yeariend (2006). the conpany had not waoe a deokion te esmolene or atavoon the Bortet wel. mequghto: Ahepare gounal erithes tor the above tohiachins 16. The Allen Oil Company incurred the following costs and had the other transactions shown below for the years 2005 and 2006. The company uses the successful efforts method of accounting. 2005 a. Paid $100,000 for G\&G costs during the year. b. Leased acreage in three individually significant areas as follows: 1) Adams lease-1,000 acres @ $60 per acre bonus, other acquisition costs, $3,000. 2) Grove lease -800 acres @ a lease bonus of $70 per acre, and other acquisition costs of $10,000 3) Borden lease -600 acres (i $60 per acre bonus and other acquisition costs of $8,000. c. The company also leased 20 individual tracts for a total cost of $80,000. These leases are considered to be individually insignificant and are the first insignificant unproved properties acquired by Allen. d. Paid $5,000 in costs to maintain lease and land records in 2005. Also, paid $30,000 to successfully defend a title suit concerning the Grove lease. e. Paid the following costs in connection with Grove \#1: G\&G costs to locate a wellsite . . . . . ............. $3,000 Location and road preparation prior to spudding-in the well Surface damages ..........................15,000 Surface casing .............................. 7,000 Contractor's fee/daywork rate .................. 175,000 Equipment rentals ............................ $200,000 Drilling fluids .............................. 35,000 Fuel .................................... 9,000 Drill bits .................................... 20,000 Cementing services ......5,000 Roustabout labor . ........................8,000 Hauling and transportation ................... 7,500 Page 12 of 23 xto Page 12 of 23 Production casing ....................... ..0,000 Tank battery .............................11,000 Flow lines and connections . . ................ 5,500 Pumping unit motor and accessories ............ 50,000 Casing head and connections .................6,500 Tubing ....................................8,500 Separating and treating equipment . .............7,100 Measuring equipment .....................300 Downhole pump and rods ................... 5,600 Testing and acidizing ....................11,000 f. An exploratory well was drilled on the Borden lease in 2005 on a turnkey basis to 8,000 feet. The contractor's charge was paid for $400,000, which included $60,000 for casing. At the end of 2005, a decision had not been made to complete or abandon the well. No major capital expenditure was required. At the end of 2005 , the Adams lease was impaired 60% and the Borden lease by 30%. The company's policy is to maintain an allowance for impairment at 70% of the cost of insignificant leases. 2006 a. Delay rentals of $2,000 were paid on the Adams lease, $1,200 on the Borden lease, and $3,000 on insignificant leases. b. During 2006, the Adams lease was abandoned and three of the individually insignificant leases (cost $8,000 ) were aiso abandoned. The Borden lease is now considered to be a very valuable lease because a large producer was discovered on adjoining land. c. At year-end (2006), the company had not made a decision to complete or abandon the Borden well. REQUIRED: Prepare joumal entries for the above transactions. 13 23