Question: The Manguino Oil Company incurred exploration costs in 2011 sear

The Manguino Oil Company incurred exploration costs in 2011 searching and drilling for oil as follows:


It was determined that Wells 104–108 were dry holes and were abandoned. Wells 101, 102, and 103 were determined to have sufficient oil reserves to be commercially successful.

Required:
1. Prepare a summary journal entry to record the indicated costs assuming that the company uses the full-cost method of accounting for exploration costs. All of the exploration costs were paid in cash.
2. Prepare a summary journal entry to record the indicated costs assuming that the company uses the successful efforts method of accounting for exploration costs. All of the exploration costs were paid incash.
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  • CreatedJuly 02, 2013
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