Michael Oil Company operates Leases X and Y. Michael Oil transfers 60 barrels of oil from Lease
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Michael Oil Company operates Leases X and Y. Michael Oil transfers 60 barrels of oil from Lease X to Lease Y to be used as fuel on Lease Y. The current spot oil price is $110/bbl, and the severance tax rate is 5%. Michael owns 100% working interests in Lease X and Lease Y. Lease X has a 1/8 royalty interest, and Lease Y has a 3/16 royalty interest.
REQUIRED: Prepare an entry for the transfer of the oil.
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