Stephens Oil Company produces a total of 2,000 barrels of oil in June that is sold in July. The posted field price and the actual selling price is $66/bbl. The severance tax rate is 5%. The purchaser of the oil will pay the severance tax to the state and also will pay the royalty interest owner. The royalty interest is 1/8.

REQUIRED: Prepare entries assuming Stephens Oil recognizes revenue

(a) at time of sale, and

(b) at time of production based on the posted field price.