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10. Libby Oil Company has a working interest in a remote lease located in Wyoming....

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Accounting

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10. Libby Oil Company has a working interest in a remote lease located in Wyoming. Libby agreed to pay the royalty owner a minimum royalty of $500/month in addi- tion to the 1/5 royalty. Gas production on the lease began in the third month after the lease contract was signed. Total sales revenue during the third month and the next two months was $6,000 each month. The severance tax rate was 10%. REQUIRED: Give the revenue and minimum royalty entries for the first five IS, assuming Libby takes the responsibility of distributing taxes and royalty. and also assuming the following a. Th b. Th e minimum royalty payments were not recoverable. e minimum royalty payments were recoverable

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