Kincaid Oil Company sells 20,000 (gross) Mcf of gas at $9/Mcf. The lease is burdened with a
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Kincaid Oil Company sells 20,000 (gross) Mcf of gas at $9/Mcf. The lease is burdened with a 1/6 RI, and the working interest owner has assigned an ORI of 1/10. The severance tax rate is 7%.
REQUIRED: Record the entries for the royalty interest owner, ORI owner, and working interest owner, assuming:
a. The purchaser assumes responsibility for distributing taxes and royalty income.
b. Kincaid Oil assumes the responsibility for distributing taxes and royalty income.
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