Q6 LERA sells 20,000 (gross) BBL of oil at $62/BBL. The lease is burdened with a 1/8 Royalty Interest, and the working interest owner has assigned an ORI of 5% to Black Jack Oil. The severance tax rate is 7%. REQUIRED: (1) Determine the decimal interest for each owner. (2) Determine the gross revenue for each owner. (3) Determine the severance tax for each owner. (4) Determine the expenses percentage paid by each owner. (5) Record the sale for the working interest owner.

Oil and Gas Accounting