McGavin Oil Company obtained 200 Mcf of gas from Lease A and used the gas for gas
Question:
McGavin Oil Company obtained 200 Mcf of gas from Lease A and used the gas for gas injection on Lease B. The gas was valued at $12/Mcf. Assume production taxes are 5% and the royalty on Lease A is a 1/6 RI.
REQUIRED:
a. Give the entry necessary to record the transfer of the gas.
b. Give the entry assuming 100% of the gas is recovered and sold at $12/Mcf.
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