XYZ Oil Company ("XYZ") began operations during 2018 and uses the full cost method of accounting for oil and gas exploration and production activities. All of XYZ's oil and gas activities are in the United States. The following information is for the year ended 12/31/2018.

	Transactions for 2018	Lease A	Lease B	Lease C
a.	Acquisition costs of unproved properties/leases*	$60,000	$25,000	$42,000
b.	Broad area G&G costs*	$65,000	$55,000	$95,000
c.	Drilling Costs - exploratory wells*	$230,000	$250,000	$270,000
d.	Drilling Results	Drilling completed; well is dry; lease is abandoned	Drilling not completed	Drilling Completed
	Proved Reserves (as of 12/31)#			500,000 bbl
	Proved Developed Reserves (as of 12/31)#			300,000 bbl
e.	Production#			20,000 bbl
f.	Total revenue from oil sales			$1,300,000
g.	Lifting Costs			$470,000
h.	December 31			Record DD&A

Other information: Assume XYZ excludes all possible costs from the amortization base. Also ignore asset retirement costs, including future asset retirement costs. Proved undeveloped reserves, as noted above, are 200,000 bbls, and future development costs related to those proved undeveloped reserves are estimated to be $225,000.

Required: From the data (1) prepare journal entries, including a revenue entry, for XYZ; where appropriate, key the journal entry to the letter in left column, and (2) prepare a single-step income statement for XYZ for 2018. Assume no income taxes and provide your answers in whole dollars (i.e., round to the nearest dollar). Where appropriate, use accounts payable, accounts receivable or cash, as the offsetting portion of the journal entries. Where meaningful, show your computations. Prepare you response in an Excel worksheet and upload the file.

* - entries may be combined (i.e., it is not necessary to show an entry for each lease)

# - Reserves, production, costs and revenue provided are for the total well. XYZ owns a 100% working interest in each lease. Each lease is burdened by a 3/16 royalty interest held by the respective land owners.