Summarized descriptions of operational and financial activity for August 2010 related to the various Gas Balancing events of Lomax Pipeline Company are given below.

a. During the first days of August, Lomax purchased 600,000 MMBtu on the spot market at \($2.80\) in anticipation of additional system balancing gas needs.

b. Pipeline receives 50,000,000 MMBtu from transport customers, retains 2,200,000 MMBtu for fuel usage, and delivers 46,800,000 to the customer’s delivery points.

c. Pipeline uses 2,600,000 MMBtu for compressor station fuel to operate the pipeline.

d. Pipeline withdraws 2,500,000 MMBtu of system gas from storage at various times during the month, and injects 2,300,000 MMBtu of system gas into storage.

e. Unaccounted-for gas (UAF) lost on the system during the month is computed based on the above transactions to be ________ MMBtu, or less than ________%
of customer receipts for delivery.

REQUIRED:

a. Prepare a Gas Balance Form showing the gas volumes that correspond to the descriptions.

b. Prepare the associated accounting entries. Assume that Lomax Pipeline uses the inventory method for recording System Gas, and is using the weighted average cost of gas (WACOG) as its cost method. The WACOG rate is \($2.50\) and the average spot price for the month is \($2.70.\) In addition, FERC has approved a fuel tracker mechanism for this pipeline company. Structure the entries so that the net System Gas (storage) activity is all recorded in the last entry.