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ErnestErnest

?Oil, Inc. has an account titled Oil and Gas Properties.

ErnestErnest

paid

$ 6 comma 000 comma 000$6,000,000

for oil reserves holding an estimated

400 comma 000400,000

barrels of oil. Assume the company paid

$ 590 comma 000$590,000

for additional geological tests of the property and

$ 430 comma 000$430,000

to prepare for drilling. During the first? year,

ErnestErnest

removed and sold

62 comma 00062,000

barrels of oil. Record all of

ErnestErnest?'s

?transactions, including depletion for the first year. ?(Record debits? first, then credits. Select the explanation on the last line of the journal entry? table.)

ErnestErnest

paid

$ 6 comma 000 comma 000$6,000,000

for oil reserves holding an estimated

400 comma 000400,000

barrels of oil.

Record the payment for the oil reserves. Do not record payment for any additional costs associated with the oil reserves? (geological testing? and/or drilling). We will do this in the following entry.

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Date			Accounts and Explanation	Debit	Credit

Assume the company paid

$ 590 comma 000$590,000

for additional geological tests of the property and

$ 430 comma 000$430,000

to prepare for drilling.

Record the payment for additional geological tests of the property and for preparing the property for drilling. ?(Record a single compound journal? entry.)

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Date			Accounts and Explanation	Debit	Credit

During the first? year,

ErnestErnest

removed and sold

62 comma 00062,000

barrels of oil.

Record the depletion expense for the first year. ?(Assume no residual value. Round interim calculations to the nearest cent and your final answers to the nearest whole? dollar.)

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Date			Accounts and Explanation	Debit	Credit

Answer 1