Clarence Oil Company conducted G&G activities on leases owned by Lamar Oil Company and Universal Oil Company. Each agreement provides for Clarence Oil Company to receive a 25% working interest in each lease if proved reserves are found or to be reimbursed if proved reserves are not found. Clarence Oil Company incurred the following G&G costs on Lamar Oil’s and Universal Oil’s leases:

The well drilled on the Lamar Oil lease was successful, and a 25% working interest was assigned. Drilling on the Universal Oil lease resulted in a dry hole, and Clarence Oil was reimbursed for the G&G costs incurred.
REQUIRED: Prepare entries for the above transactions.

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Lamar $75,000 Universal $60,000