Basic Oil Company conducted G&G activities on leases owned by Artificial Oil Company and Universal Oil...

 

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Basic Oil Company conducted G&G activities on leases owned by Artificial Oil Company and Universal Oil Company. Each agreement provides for Basic Oil Company to receive one-fourth of each working interest if proved reserves are found and to be reimbursed if proved reserves are not found. Basic Oil Company incurred the following G&G costs on Artificial and universal's leases: Artificial $50,000 Universal $40,000 The well drilled on the Artificial Oil lease was successful, and one-fourth of the working interest was assigned. Drilling on the Universal lease resulted in a dry hole, and Basic was reimbursed for the G&G costs incurred. Prepare entries for the above transactions. Basic Oil Company conducted G&G activities on leases owned by Artificial Oil Company and Universal Oil Company. Each agreement provides for Basic Oil Company to receive one-fourth of each working interest if proved reserves are found and to be reimbursed if proved reserves are not found. Basic Oil Company incurred the following G&G costs on Artificial and universal's leases: Artificial $50,000 Universal $40,000 The well drilled on the Artificial Oil lease was successful, and one-fourth of the working interest was assigned. Drilling on the Universal lease resulted in a dry hole, and Basic was reimbursed for the G&G costs incurred. Prepare entries for the above transactions.

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To record the transactions described the following journal entries would be made 1 To record the GG ... View the full answer