Conseco Oil Company consists of an account titled Oil and Gas Properties. Conseco paid $6,000,000 for oil reserves holding an estimated 500,000 barrels of oil. Suppose that the company paid $550,000 for additional geological tests of the property and $450,000 to prepare for drilling. Throughout the first year, Conseco removed 70,000 barrels of oil, which it sold on account for $30 per barrel. Operating expenditures totaled $800,000, all paid in cash.
a) Journalize the transactions.
b) Income Statement for the project.