Payne Oil Company began operations during 2019. The following information is as of 12/31/19 and early 2020. Expense lifting costs as lease operating expense.

h. Assume on January 2 of the second year (2020) that disaster struck both Lease A and Lease B. Give the entries to record abandonment of Lease A and Lease B. Assume equipment costing $15,000 was salvaged from Lease A. Assume this is not a post–balance sheet event that would give rise to changes in the balance sheets or income statements of previous years.
*May combine entries for different leases.

REQUIRED: From the data, (1) prepare entries, and (2) prepare an income statement for Payne Oil Company for 2019, assuming revenue to the company from oil sales is $1,200,000.

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Transactions, 2019 *a. Acquisition costs of unde- veloped leases (1/8 RI) *b. G&G costs *c. Drilling costs d. Drilling results: Proved reserves Proved developed reserves e. Production f. Lifting costs g. December 31 Transactions, 2020 Lease A $ 60,000 60,000 200,000 Drilling completed 700,000 bbl 300,000 bbl (as of 12/31) 10,000 bbl Lease B $ 30,000 50,000 230,000 Drilling completed; dry $ 250,000 Recorded DD&A Impaired lease 40% Lease C $ 40,000 90,000 250,000 Drilling not completed