Question

During 2018, Longhorn Petroleum made the following transactions relating to test well contributions: a. Contracted with King Energy Corporation, agreeing to pay $80,000 if a well was drilled on Garth's lease to a depth of 20,000 feet. b. Contracted to pay Richards Oil Company $65.000 if a well being drilled on Varsity's property was dry. c. Agreed to pay Carnegie Oil Company $110,000 if a well being drilled reached a depth of 9,000 feet Results from the above transactions were the following: a. Because of mechanical difficulty, the King well was abandoned at 9,500 feet. b. The Richards well was dry. c. The Carnegie well was completed as a producer at 12,000 feet. REQUIRED: Prepare entries for the above transactions, assuming Longhorn Petroleum fulfilled its contractual obligations.

Answer 1

Iten	Account	Dr	Cr
a	No Entry	0
a	No Entry		0
b	Richard Oil Co	65000
b	To Bank		65000
c	Carnegi oil co	110000
c	To Bank		110000