Prepare the appropriate journal entries for the transactions below using the Successful Efforts method of accounting. Petroleum Company incurred the following transactions below during 2019:
A) On January 3, 2019, acquired 600 acres undeveloped lease (Lease A) paying $1,000-per acre bonus. Legal costs and recording fees were $23,000. The salary of a company attorney working solely on the Lease A acquisition was $200,000. The attorney's salary is allocated to all leases acquires based on relative acreage acquired.
B) During 2018, leases totaling 8,000 acres were acquired. On February 12, 2019, paid for shooting rights on unproved leases (Lease B) $50,350 on 400 acres owned by the Gusher Family
C) On April 11, 2019, paid a delay rental of $70,500 on Lease B.
D) On May 16, 2019, acquired an additional unproved lease for Lease B at a total cost of $85,000.
E) During the month, drilled 2 dry holes on the property. As a result of drilling those dry holes, decided that the lease was 70% impaired on 05/30/2019.
F) Incurred the following drilling costs during the year:
Date Description Amount
07/15/2019 Lease A - Drilling Contractor's Charges β day rate $800,000
07/26/2019 Lease B - Drilling Contractor's Charges β day rate $600,000
08/22/2019 Casing & Tubing β Lease A $130,000
08/23/2019 Casing & Tubing β Lease B $228,000
09/27/2019 Lease A β Production Equipment $175,000
09/28/2019 Lease A β Cement Service $140,000
09/30/2019 Lease A β Installation of Heater Treater $100,000
11/30/2019 Lease A β Found proved reserves
11/30/2019 Lease B β Well was determined to be dry