George Oil Corporation drilled a successful gas well. Although capable of production, the well was shut in awaiting the completion of a pipeline. Shut-in royalty payments of $2,000 per month were paid during the months of April through July. Assume the following independent cases:

REQUIRED:

a. The shut-in royalty payments were not recoverable from future production. Give the entry to record payment of the shut-in royalty for April.

b. The shut-in royalty payments were recoverable from future production. Give the entry to record payment of the shut-in royalty for April.