The following activities of Sunshine Oil Company need to be journalized. Please be attentive to dates. There is a chart of accounts to use in preparing the following eighteen journal entries.

Sunshine Oil Company, a successful-efforts company, incurred the following costs during the years 2020 and 2021:

2020

a. Contracted and paid $50,000 for G&G surveys during the year.

b. Leased acreage in four areas as follows:

a. Lease One 500 acres @ $50/acre bonus; other acquisition costs $2000.

b. Lease Two 800 acres @ $100/acre bonus; other acquisition costs $3000.

c. Lease Three 200 acres @ $60/acre bonus; other acquisition costs $500.

d. Lease Four 600 acres @ $30/acre bonus; other acquisition costs $800.

Each lease had a delay rental clause requiring payment of $10 per acre if drilling was not commenced by the end of one year. Also, each of the above leases was considered individually significant.

c. The company also leased 10 individual tracts for a total consideration of $60,000. The tracts are considered to be individually insignificant and are the first individually insignificant unproved properties acquired by Sunshine.

d. The company incurred $1000 in costs to maintain lease and land records in 2020.

e. During 2020, the company incurred the following costs in connection with Lease One when drilling an exploratory well:

IDC $971,000 and L&WE $89,100

Completion costs in connection with the above well were as follows:

IDC $61,000 and L&WE $264,000

f. An exploratory well was drilled on Lease Two in 2020 on a turnkey basis to 9000 feet. The contractors charge was $300,000, which included $40,000 for casing. At the end of 2020, a decision had not been made to complete or abandon the well. Both criteria for maintaining the suspended well classification were met.

g. At the end of 2020, Lease Four was impaired by 40% and Lease Three by 20% The company has a policy of maintaining an allowance for impairment equal to 60% of individually insignificant leases.

Prepare ALL journal entries for 2020. (HINT: there are 14 separate entries in 2020, including compound entries for drilling and completion.)

2021 --

h. Delay rentals were paid on Leases Three and Four.

i. Late in 2021, the company abandoned Lease Three and two of the individually insignificant leases, which cost a total of $8000 when acquired. Lease Four is now considered to be a very valuable lease because a large producer was found on adjacent property.

j. At year-end, the company still could not decide whether to complete or abandon the well on Lease Two, and both criteria for delaying classification of the well were no longer met.

Prepare ALL journal entries for 2021. (HINT: there are 4 separate entries in 2021.)

Please choose from the following account titles for journal entries

Abandoned Leasehold Costs

Ad Valorem Tax Expense

Allowance for Impairment

Cash

Delay Rental Expense

Dry Hole Expense IDC

Dry Hole Expense L&WE

G&G Expense

Land

Lease Impairment Expense

Legal Expense

Property Purchase Suspense

Proved Property

Record Maintenance Expense

Surrendered Lease Expense

Test-well Contribution Expense

Unproved Property

Wells & Equipment IDC

Wells & Equipment L&WE

Wells-in-Progress IDC

Wells-in-Progress L&WE