Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright

Exercise 18

Cameron Company (70% WI) and Garcia Company (30% WI) own a joint working
interest in the Dowling Field. There is a 1/8 royalty owner. The 1/8 royalty is shared
proportionally by Cameron and Garcia. Cameron and Garcia agree that Cameron's
purchaser will take March's gas production and Garcia's purchaser will take April's
production. Gas allocations will be equalized in May. Ignore severance taxes.
Gross production and gas prices were as follows: Each working interest owner receives payment only for gas delivered to his purchaser.
REqUIRED:
a. Prepare a gas balance report.
b. Prepare entries for the three-month period for both parties assuming both
companies use the entitlement method for both revenue and royalty.