Lightfoot Oil Corporation drilled 10 oil wells at the beginning of the current year. The total exploration costs associated with this oil and gas activity amounted to $ 7,785,000. Only four of the wells were producing and the remaining wells are dry or nonproductive assets. It is estimated that the four successful wells will produce $ 17,300,000 barrels of oil over their estimated useful life. Assume all expenditures are paid in cash.

a.

Prepare the journal entry to record the exploration costs assuming the company uses the full-cost method.

Oil and Gas Deposit	7785000
Cash		7785000

b.

Prepare the journal entry to record the exploration costs assuming the company uses the successful-efforts method.

oil and gas deposit	?
Unsuccessful Exploration Costs	?
Cash		?

c.

Assuming that $2,200,000 barrels of oil were produced during the currentyear, prepare the journal entry to record the depletion expense under theunits-of-output approach (no residual value) assuming that:

i. the full-cost method is used.

ii. the successful-efforts method is used.