Energia Petro owned the following unproved property as of the end of 2009.

Significant Leases		Insignificant Leases
Lease R	$530,000	Lease S	$55,000
Lease T	$320,000	Lease U	$40,000
Total	$850,000	Lease V	$30,000
		Lease W	$25,000
		Total	$150,000

Although no activity took place on Lease R during the year, Energia Petro decided that Lease R was not impaired because there were still five years left in that lease’s primary term. Three dry holes were drilled on Lease T during the year; but because Energia Petro intended to drill one more well on Lease T in the coming year, it decided that Lease T was only 50% impaired. With respect to the insignificant leases, past experience indicates that 68% of all unproved properties assessed on a group basis will eventually be abandoned. Energia Petro’s policy is to provide at year-end an allowance equal to 70% of the gross cost of these properties. The allowance account had a balance of $26,000 at year end. Give the entries to record impairment, prepare the adjusted trial balance, and calculate the net income.