Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright

Exercise 16

Action Oil and Gas Corporation operates the Flat Hill Basin. Along with oil, this field
produces large quantities of saltwater. The saltwater is highly corrosive, and as a result,
the downhole production equipment is subject to frequent replacement. During the first
half of 2014, Action must replace the tubulars in wells A, B, and C. Wells X, Y, and Z
(newly drilled wells) are in the process of being completed.
During April, Action receives a shipment containing 500 joints of production tubing.
The invoice totals $500,000 plus $3,000 for transportation and hauling. The production
tubing is installed in the following wells: Record the purchase and installation of the production tubing.