Gemini Oil Company owns a 100% working interest in a lease on which there is a 1/8royalty interest. During one month, Gemini Oil produced and sold 3,000 MCF of gas at$4.50/mmbtu to Tawhoe Gas Plant. Based on gas analysis the btu factor is 1.039. Assumeproduction taxes are 5%.A). Calculate the revenue distribution (Gross revenue, severance tax and net of severancetax) for working interest and royalty owners.B). Prepare the journal entry assuming the Gemini Oil Compnay is responsible fordistributing royalty and production taxes.C). Prepare the journal entry assuming Tawhoe Gas Plant is responsible for distributingroyalty and severance tax.80F3000000F4F5士$4%do L5>6MacBook AirF6&277F7ERTYU,FLLGH* 8DIIDDF8F9(9KO0

Let's break down the problem step by step:A) Revenue Distribution: 1.Gross Revenue: Gross Revenue =…

Answered: Gemini Oil Company owns a 100% working…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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ENG Oil Company produced and sold 30,000 barrels of oil during May 2020 at $60/bbl from lease A. The company has 4/5 revenue interest in the above lease with 60% working interest. North Oil Company is a non-operator working interest owner in Lease A. In addition, the National Company purchased ORI in lease A. The severance tax rate applied is 5% and ENG reported revenue of $810,000 for May sales. prepare the journal entry for the overriding interest owner to record the sale of oil.
Prospect Oil Company sold a total of 1, 000Mc gas at $9/ Mcf. The lease provides a 1/5 RI. The working interest owners receives 100% of the revenue (net of 5% severance tax) and then distributes the amount due to the royalty interest owner. REQUIRED: Give the entry by Prospect to record the sale of the gas.
Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and 60 1 Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $bl. The rovalty interest is and the severance tax rate is 10%. b Prepare the revenue entries for Cameron Oil Company and Garcia Company. Well Days Produced 30 26 24 Liberty Well 1 Freedom Well A-1 Total Production Sold 2,900-measured at point of delivery 24-Hr Test (bbl) 20 35 Dyson Powell 50 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%. Prepare the revenue entries for Cameron Oil Company and Garcia Company.
ENG Oil Company produced and sold 30,000 barrels of oil during May 2020 at $60/bbl from lease A. The company has 4/5 revenue interest in the above lease with 60% working interest. North Oil Company is a non-operator working interest owner in Lease A. In addition, National Company purchased ORI in lease A. The severance tax rate applied is 5% and ENG reported a revenue of $810,000 for May sales. a. Prepare the journal entry for ENG to record the sale of the oil, given thatthe purchaser assumes the responsibility of distributing severance taxesand royalty income.b. Prepare the journal entry for ENG to record the sale of the oil, given thatENG assumes the responsibility and receives 100% proceeds.c. Prepare the journal entry for National Company to record the sale of oil.d. Prepare the journal entry for the royalty interest owner to record the saleof oil.e. Prepare the journal entry for the overriding interest owner to record thesale of oil.
COL Inc. can either purchase an equipment for $650,000 or lease it from LEN Inc. by making 12 annual lease payments (paid at the beginning of the year) of $89,600. The equipment has CCA rate of 20% and will have salvage value of $56,000 at the end of year 12. Assume this asset is the only asset in the asset class for both companies. LEN’s borrowing cost is 11% which is 1% lower than COL’s. COL and LEN have tax rate of 15% and 40% respectively. a) Calculate the NPV of leasing for COL. b) Calculate the NPV of leasing for LEN. c) Calculate the maximum and minimum annual lease payment acceptable to COL and LEN respectively.
Happy Company purchased a packing machine intended for leasing at a cost of P330,000. The machine was leased to Great Company on January 1, 2021, at an annual rental of P58,860 payable in advance over a period of 10 years. The lease qualifies as a direct financing lease. There is no expected residual value for the asset. Implicit interest rate is 16%. Happy Company uses the calendar year. What is the amount of interest revenue recognized in profit or loss by Happy Company for the years 2021 and 2022? A. P43,382 and P40,906 B. P52,800 and P51,830 C. P43,832 and P40,609 D. P52,800 and P51,380
8. PIPO Co enters into the lease of a piece of machinery for $10,000 per annum for 5 years at 9.5%. According to IFRS 16 leases what is the amount of expenses that should be incorporated in the first year in the profit and loss statement * D5 6955.74 6352.28 14034.69 15364.71
Hy Marx Co. recorded a right-of-use asset of $600,000 in a 10-year operating lease. Lease payments are made annually at January 1 of each year beginning January 1, 2021. The interest rate charged by the lessor was 10%. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required:Prepare the appropriate journal entries on January 1, 2021, and December 31, 2021. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amounts.)
Saturday Corporation is in the business of leasing new sophisticated equipment. The lessor expects a 12% return on net investment. All leases are classified as direct lease. At the end of the lease term, the equipment will revert to the lessor. At the beginning of current year, an equipment is leased to a lessee with the following information: Cost of equipment to the lessor P5,000,000 Residual value — unguaranteed 600,000 Annual rental payable in advance at the beginning of each year 900,000 Initial direct cost incurred by the lessor 250,000 Useful life and lease term 8 years Implicit interest rate 12% What is the total unearned interest income?
Big Bucks leased equipment to Shannon Company on July 1, 2021. The lease payments were calculated to provide the lessor a 9% return. Ten annual lease payments of $39,000 are due each July 1, beginning July 1, 2021. (FV of $1. PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare the journal entries to record the lease by Shannon at July 1, 2021, and at December 31, 2021, the end of the reporting period. Consider this to be a finance lease. 2. Prepare the journal entries to record the lease by Shannon at July 1, 2021, and at December 31, 2021, the end of the reporting period. Consider this to be an operating lease. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries to record the lease by Shannon at July 1, 2021, and at December 31, 2021, the end of the reporting period. Consider this to be an operating lease. (If no entry is required for a…
Blue Co. recorded a right-of-use asset of $150,000 in a 10-year operating lease. Payments of $24,412 are made annually at the end of each year. The interest rate charged by the lessor was 10% and was known by Blue. The balance in the right-of-use asset after two years will be:
A Co. recorded a right-of-use asset of $400,000 in a 10-year operating lease. Payments of $65,100 are made annually at the end of each year. The interest rate charged by the lessor was 10%. The balance in the right-of-use asset after the first year will be: a. $376,900. b. $374,900. c. $360,000. d. $400,000.

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