Chapman Oil Company has an account titled Oil and Gas Properties. Chapman paid \($6,600,000\) for oil reserves holding an estimated 500,000 barrels of oil. Assume the company paid \($590,000\) for additional geological tests of the property and \($430,000\) to prepare for drilling. During the first year, Chapman removed 72,000 barrels of oil, which it sold on account for \($34\) per barrel. Operating expenses totaled \($870,000\), all paid in cash.
Requirement
1. Record all of Chapman’s transactions, including depletion for the first year.