Since Goode Oil Company was formed in 2015, it has used the full-cost method for financial reporting and recorded all exploration costs in an asset account called Oil and Gas Properties. At the beginning of 2017, it changes to the successful-efforts method. Goode previously had reported pretax income of $2,013,000 and $2,121,000 in 2015 and 2016, respectively. Analysis of the accounting records discloses that the company incurred the following exploration expenses based on the successful-efforts method:

Exploration expenses

2015 $564,500

2016 $777,000

Required:In 2017, Goode reported pretax income of $3,012,000 under the successful-efforts method. The tax rate is 35%. Goode has a simple capital structure with 100,000 shares of common stock outstanding. It paid no dividends.

1.	Prepare the journal entry to reflect the change in method at the beginning of 2017.
2.	If the company also presents the 2015 and 2016 financial statements for comparative purposes, prepare the income statement disclosures (starting with income before income taxes) and retained earnings disclosures that are required in 2017.

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GENERAL JOURNAL

Score: 25/37

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1	Jan 1	Retained Earnings
2		Deferred Tax Asset
3		??

GOODE OIL COMPANY

Comparative Income Statements (Partial)

For the Years Ended December 31, 2015 - 2017

1		2017	2016 As Adjusted	2015 As Adjusted
2	Income before income taxes
3	Income tax expense
4	Net income
5	Earnings per common share (100,000 shares)

GOODE OIL COMPANY

Comparative Statements of Retained Earnings

For the Years Ended December 31, 2015 - 2017

1		2017	2016	2015
2
3
4
5
6