Gandy Oil Incorporated has an account titled Oil and Gas Properties. Gandy paid $6,100,000 for oil reserves holding an estimated 300,000 barrels of oil.Assume the company paid $560,000 for additional geological tests of the property and $480,000 to prepare for drilling. During the first year, Gandy removed and sold 95,000 barrels of oil. Record all of Gandy's transactions, including depletion for the first year. Gandy paid $6,100,000 for oil reserves holding an estimated 300,000 barrels of oil. Record the payment for the oil reserves. Do notrecord payment for any additional costs associated with the oil reserves (geological testing and/or drilling). We will do this in the following entry. DateAccounts and ExplanationDebitCreditOil and Gas Properties6,100,000Cash6,100,000To record purchase of oil reserves.Assume the company paid $560,000 for additional geological tests of the property and $480,000 to prepare for drilling.Record the payment for additional geological tests of the property and for preparing the property for drilling.
To record depletion.Decorative Steel began January with 70 units of iron inventory that cost $25 each. During January, the company completed the following inventorytransactions:UnitsUnit CostUnit Sale PriceJan. 3 Sale60$74 8Purchase80$43 21Sale707930Purchase2049Requirement 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method.Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.)