Garrison Oil Company has an account titled Oil and gas properties. Garrison paid $6,400,000 for oil reserves holding an estimated 500,000 barrels of oil. Assume the company paid $530,000 for additional geological tests of the property and $460,000 to prepare for drilling. During the first year, Garrison removed 82,000 barrels of oil, which it sold on account for $32 per barrel. Operating expenses totaled $830,000, all paid in cash.
Requirement
1. Record all of Garrison’s transactions, including depletion for the first year.