6. (6 points) On April 18th, 2020, McConnell Corporation acquires a petroleum (crude oil) reservoir...
90.2K
Verified Solution
Link Copied!
Question
Accounting
6. (6 points) On April 18th, 2020, McConnell Corporation acquires a petroleum (crude oil) reservoir and the underlying land. On that date, McConnell Corporation incurs $790,000 in capitalizable costs to develop the property for crude oil extraction. Assume that no additional capitalizable costs associated with the property are incurred subsequent to its acquisition. On the acquisition date, McConnell Corporation estimates that the reservoir contains the equivalent of 16,000 barrels of crude oil. McConnell Corporation expects the reservoir to have no residual value once its petroleum reserves are exhausted. a. (2 points) On July 14th, 2020, McConnell Corporation extracts 6,000 barrels of crude oil from the reservoir, which it holds in its petroleum inventory for resale. Please prepare the journal entry(ies) recorded by McConnell Corporation on July 14th, 2020. Write NONE if no journal entries are recorded. b. (4 points) On September 17th, 2020, McConnell Corporation sells 25% of the barrels of crude oil that it extracted on July 14th, 2020 for $1 14/barrel. Assuming that all sales are made in cash, please prepare the journal entry(ies) recorded by McConnell Corporation on September 17th, 2020. Write NONE if no journal entries are recorded
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
