Mountain Oil Company owns a 100% working interest in a lease in Wyoming. The lease...
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Accounting
Mountain Oil Company owns a 100% working interest in a lease in Wyoming. The lease is burdened with a 1/5 royalty. During the month of July, a total of 10,000 barrels of oil was produced and sold. Assume the selling price of the oil was $90/bbl and the production tax was 5%.
REQUIRED: Give the entry required to record the sale of the oil for each of the following:
A. The purchaser assumes the responsibility for distributing taxes and royalty income.
B. Mountain Oil Company assumes the responsibility.
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