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Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
Edition 5ISBN: 9781630181031Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
Edition 5ISBN: 9781630181031 Exercise 1
Cameron Oil Company produced a total of 2,000 barrels of oil in June 2012. The
expected selling price was $60/bbl. The purchaser pays the severance taxes and the
royalty interest owner and remits the remainder to Cameron Oil. The royalty interest is
1/5, and the severance tax rate is 10%.
a. Prepare the entry for Cameron Oil Company and the RI owner, assuming the oil
was sold in June 2012 at the expected selling price.
b. Prepare entries for Cameron Oil Company, assuming that revenue is recognized as
produced based on the expected selling price and that the oil produced in June was
sold in July 2012 for $66/bbl.
expected selling price was $60/bbl. The purchaser pays the severance taxes and the
royalty interest owner and remits the remainder to Cameron Oil. The royalty interest is
1/5, and the severance tax rate is 10%.
a. Prepare the entry for Cameron Oil Company and the RI owner, assuming the oil
was sold in June 2012 at the expected selling price.
b. Prepare entries for Cameron Oil Company, assuming that revenue is recognized as
produced based on the expected selling price and that the oil produced in June was
sold in July 2012 for $66/bbl.
Explanation
Verified
Verified
a.The required journal entry is - 
On re...
Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
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