6. Suga owned a 20% royalty interest in an oil well. Suga received royalty payments on Januan 31 for the oil sold between the previous June 1 and November 30, an on July 31 for oil betweer December 31 and May 31. Production revealed the following sales: June 1, 2019 - November 30, 2019 December 1, 2019 - December 31, 2019 December 1, 2019 - May 31, 2020 June 1, 2020 - November 30, 2020 3,000,000 500,000 4,000,000 3,250,000

6. Suga owned a 20% royalty interest in an oil well. Suga received royalty payments on Januan 31 for the oil sold between the previous June 1 and November 30, an on July 31 for oil betweer December 31 and May 31. Production revealed the following sales: June 1, 2019 - November 30, 2019 December 1, 2019 - December 31, 2019 December 1, 2019 - May 31, 2020 June 1, 2020 - November 30, 2020 3,000,000 500,000 4,000,000 3,250,000

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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Seoli owned a 20% royalty interest in an oil well. Seoli received royalty payments on January 31 for the oil sold between the previous June 1 and November 30, an on July 31 for oil between December 31 and May 31. Production revealed the following sales: June 1, 2019 - November 30, 2019 3,000,000December 1, 2019 - December 31, 2019 500,000December 1, 2019 - May 31, 2020 4,000,000June 1, 2020 - November 30, 2020 3,250,000December 1, 2020 - December 31, 2020 700,000What amount should be reported as royalty revenue for 2020?
Smile owned a 20% royalty interest in an oil well. Smile received royalty payments on January 31 for the oil sold between the previous June 1 and November 30, an on July 31 for oil between December 31 and May 31. Production revealed the following sales: June 1, 2019-November 30, 20193,000,000 December 1, 2019-December 31, 2019500,000 December 1, 2019-May 31, 20204,000,000 June 1, 2020-November 30, 20203,250,000 December 1, 2020-December 31, 2020700,000 What amount should be reported as royalty revenue for 2020?
Jaimson Energy operates a lease in Hutchinson County, Texas. The lease is burdened with a 1/8 royalty interest held by the Burnett Family Trust. Prior to the first sale of oil Jaimson Energy assigns an overriding royalty interest of 6.25% of its 87.5% net revenue interest to Sunset Oil. Following the assignment, Jaimson Energy produces 1,500 barrels of oil in March 2022 and sells 975 barrels. The severance tax is 5%, lease operating expenses totaled $35,000 and price per BBL is $99. Record the sale for the Burnett Family Trust. How much of the lease operating expenses does Sunset Oil pay?
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.
A Ltd buys a machine on 1 June 19.1 the cost price of which is R1 000 000. A Ltd provides for depreciation on machinery at 20% per annum according to the straight-line method. The SA Revenue Service allows a wear-and-tear allowance of 25% per annum according to the straight-line method. The year-end of A Ltd is 31 May. Assume a taxation rate of 40%. Assume that A Ltd maintains a profit before provision for depreciation of R500 000 each year. Identify the current tax for the year ended 31 May 19.2. Select one: a. R180 000 b. R20 000 c. R100 000 d. R120 000
A Ltd buys a machine on 1 June 19.1 the cost price of which is R1 000 000. A Ltd provides for depreciation on machinery at 20% per annum according to the straight-line method. The SA Revenue Service allows a wear-and-tear allowance of 25% per annum according to the straight-line method. The year-end of A Ltd is 31 May. Assume a taxation rate of 40%. Assume that A Ltd maintains a profit before provision for depreciation of R500 000 each year. Identify the amount for accounting profit before tax, after depreciation provision for the year ended 31 May 19.2.
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.
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.
Ltd buys a machine on 1 June 19.1 the cost price of which is R1 000 000. A Ltd provides for depreciation on machinery at 20% per annum according to the straight-line method. The SA Revenue Service allows a wear-and-tear allowance of 25% per annum according to the straight-line method. The year-end of A Ltd is 31 May. Assume a taxation rate of 40%. Assume that A Ltd maintains a profit before provision for depreciation of R500 000 each year. Identify the amount for taxable profit for the year ended 31 May 19.2. Select one: a. R300 000 b. R250 000 c. R80 000
Ltd buys a machine on 1 June 19.1 the cost price of which is R1 000 000. A Ltd provides for depreciation on machinery at 20% per annum according to the straight-line method. The SA Revenue Service allows a wear-and-tear allowance of 25% per annum according to the straight-line method. The year-end of A Ltd is 31 May. Assume a taxation rate of 40%. Assume that A Ltd maintains a profit before provision for depreciation of R500 000 each year. Identify the depreciation amount that would be deducted to arrive at the profit for year for accounting purposes at 31 May 19.2. Select one: a. R20 000 b. R200 000 c. R50 000 d. R250 000
Accounting On December 31,2020 the account for Shane Oil Company's individually insignificant unproved properties had a balance of $600,000. The impairment allowance account had a balance of $100,000. Required Give the entries for each of the following transactions occurring in 2020 and 2021 (all transactions concern individually Insignificant unproved leases) a.Assuming Shane has a policy of maintaining a 60% allowance, i.e. 60% of gross unproved properties, give the entry to record impairment on December 31, 2020 b.During 2021 Shane surrendered leases that cost $200,000. c.During 2021,leases that cost $40,000 were proved d.Give the entry to record impairment on December 31, 2021.
1. On December 31,2020 the account for Shane Oil Company's individually insignificant unproved properties had a balance of $600,000. The impairment allowance account had a balance of $100,000. Required Give the entries for each of the following transactions occurring in 2020 and 2021 (all transactions concern individually Insignificant unproved leases) a.Assuming Shane has a policy of maintaining a 60% allowance, i.e. 60% of gross unproved properties, give the entry to record impairment on December 31, 2020 b.During 2021 Shane surrendered leases that cost $200,000. c.During 2021,leases that cost $40,000 were proved d.Give the entry to record impairment on December 31, 2021.