On December 31, 2020, the account for Mikael Energy Company's individually insignificant unproved properties had a balance of $700,000. The allowance account had a balance of $90,000.

Required:

Give the entries for each of the following transactions occurring in 2020 and 2021 (all transactions concerned individually insignificant unproved leases).

a. Assuming Mikael has a policy of maintaining a 40% allowance, i.e. 40% of gross unproved properties, give the entry to record impairment on December 31, 2020.

b. During 2021, Mikael surrendered leases that cost $130,000.

c. During 2021, leases that cost $60,000 were proved.

d. Give the entry to record impairment on December 31, 2021.