Aggie Oil Corporation, a new successful efforts company, incurred the following costs and made the other transactions shown below for the years 2018 and 2019.

2018

a. Paid $225,000 for G&G costs during the year.

b. Leased acreage in three individually significant areas as follows:

1) Mary lease—1,000 acres @ $60/acre bonus, and other acquisition costs of

$3,000 2) Batch lease—800 acres @ a lease bonus of $70/acre, and other acquisition costs of $10,000 3) Highland lease—600 acres @ $60/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 Aggie.

d. Paid $5,000 in costs to maintain lease and land records in 2018. Also, paid

$30,000 to successfully defend a title suit concerning the Batch lease.

e. Paid the following costs in connection with Batch #1, a successful well:

f. An exploratory well was drilled on the Highland lease in 2018 on a turnkey basis to 8,000 feet. The contractor’s charge of $400,000 was paid. The charge included $60,000 for casing. At the end of 2018, a decision had not been made to complete or abandon the well. Both criteria for delaying classification of the well were met. At the end of 2018, the Mary lease was impaired 60%, and the Highland lease by 30%. The company’s policy is to maintain an allowance for impairment at 70% of the cost of insignificant leases.
2019

a. Delay rentals of $2,000 were paid on the Mary lease, $1,200 on the Highland lease, and $3,000 on group leases.

b. During 2019, the Mary lease was abandoned, and three of the individually insignificant leases (cost $8,000) were also abandoned. The Highland lease is now considered to be a very valuable lease, because a large producer was discovered on adjoining land.

c. At year-end (2019), the company had not made a decision to complete or abandon the Highland well. Both criteria for delaying classification of the well were no longer met.
REQUIRED: Prepare journal entries for the above transactions.

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G&G costs to locate a wellsite Location and road preparation prior to spudding-in the well. Surface damages. Surface casing... Contractor's fee (day work rate) Equipment rentals Drilling fluids ..... Fuel..... Drill bits..... Cementing services. Roustabout labor.... Hauling and transportation Production casing Tank battery... Flow lines and connections. Pumping unit motor and accessories. Casing head and connections Tubing..... Separating and treating equipment Measuring equipment. Downhole pump and rods. Testing and acidizing..... $ 5,000 6,000 16,000 6,000 200,000 100,000 40,000 10,000 20,000 5,000 9,000 8,000 36,000 11,000 5,000 50,000 7,000 13,000 12,000 1,000 4,000 11,000