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 Oils and Universal Oils leases:

Lamar 105,000

Universal 75,000

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.

Q7- 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