Jayhawk Oil Company has a working interest in a property. In addition to the 1/5 royalty, Jayhawk agreed to pay the royalty owner a minimum royalty of $400/month.

Gas production on the lease began in the third month after the lease contract was signed. Total sales revenue during the third month and the next two months was

$6,000 each month. The severance tax rate was 10%. Give the revenue and minimum royalty entries for the first five months, assuming Jayhawk takes the responsibility of distributing taxes and royalty, and also assuming the following:

a. The minimum royalty payments were not recoverable.

b. The minimum royalty payments were recoverable.