Use the following information for questions 1-12.

Aggie Oil incurred the following costs over the course of the quarter.

Exploration engineer salaries of $15,000 (not attached to an AFE).

Performed an additional exploratory study costing $50,000 (the AFE was opened and closed in the current quarter).

Last quarter, Aggie Oil purchased the mineral rights to Lease A for $2,000,000, no drilling had begun by the end of last quarter.

Last quarter, Aggie Oil purchased an option to buy 20,000 acres for $2 per acre to acquire the acreage for $40 per acre on Lease B. Last quarter, Aggie Oil exercised the option to lease 5,000 acres, but did not start drilling. This quarter the company exercised the option to lease an additional 7,000 acres. The remaining acres will expire without being leased.

At the end of last quarter (Q1), Aggie Oil started three exploratory wells on Lease A. Costs to that point were $500,000. The company incurred additional costs of $2,000,000 on those wells this quarter. Additionally, all wells were decided by the end of this quarter. Two of the three wells did not find reserves, while one did. For both quarters assume 75% of the costs are IDC and 25% TDC. Additionally, assume the costs are evenly distributed between all wells.

At the end of this quarter (Q2), Aggie Oil started three exploratory wells on Lease B. Drilling on all wells continued through June. Costs incurred through June totaled $800,000 (75% IDC, 25% TDC).

At the end of this quarter (Q2), Aggie Oil started two development wells on Lease A. Drilling on all wells continued through June. Costs incurred through June totaled $800,000 (75% IDC, 25% TDC).

Aggie oil paid $2,000 in ad valorem taxes on producing fields.

Based on the information above determine the ending balances in the appropriate PP&E and income statement accounts at the end of last quarter and this quarter. (Ignore DD&A.)

Balance Sheet
	Last Quarter (Q1)			Current Quarter (Q2)
Unproved Property Acquisition Costs	#1		Unproved Acquisition Costs	#5
Unproved Property Acquisition Suspense	#2		Proved Acquisition Costs	#6
WIP IDC exploratory wells	#3		WIP IDC exploratory wells	#7
WIP TDC exploratory wells	#4		WIP TDC exploratory wells	#8
			IDC development wells	#9
			TDC development wells	#10

Income Statement
	Current Quarter (Q2)
Total Exploration Expense	#11
Production Expense	#12

1. Determine Last Quarter (Q1) balance in the unproved property acquisition cost account.

QUESTION 2

2. Determine the Q1 balance in the unproved property suspense account.

QUESTION 3

3. Determine the Q1 balance in WIP IDC - exploratory wells.

QUESTION 4

4. Determine the Q1 balance in WIP TDC - exploratory wells.

QUESTION 5

5. Determine the Q2 balance in the unproved property acquisition cost account.

QUESTION 6

6. Determine the Q2 balance in the proved property acquisition cost account.

QUESTION 7

7. Determine the Q2 balance in the WIP IDC - exploratory well account.

QUESTION 8

8. Determine the Q2 balance in the WIP TDC - exploratory well account.

QUESTION 9

9. Determine the Q2 balance in the IDC development wells account.

QUESTION 10

10. Determine the Q2 balance in the TDC development wells account.

QUESTION 11

11. Determine the balance in exploration expense on the income statement for Q2.

QUESTION 12

12. Determine the balance in production expense on the income statement for Q2.