Expenses for District Office A of Tyler Oil Company amounted to $35,000 for the month ofMay. The field office has supervision over the following leases and wells:LeaseNumber of Barrels of OilWellsProdcedABC11,000350042,000D21,500Total105,000A). How much would each lease be charged if the District Office expense is allocated on thebasis of the number of barels produced?B). How much would each lease be charged if the District Office expense is allocated on thebasis of the number of wells supervised?MacBook Air

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Answered: Expenses for District Office A of Tyler…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You have been assigned the task of analyzing whether to purchase or lease some transportation equipment for your company. The analysis period is six years, and the base year is year zero (b = 0). Other pertinent information is given in the shown Table also. Solve,, a. The contract terms for the lease specify a cost of $300,000 in the first year and $200,000 annually in years two through six (the contract, i.e., these rates, does not cover the annual expense items). b. The after-tax MARR (not including inflation) is 13.208 % per year (ir). c. The general inflation rate (f ) is 6%. d. The effective income tax rate (t) is 34%. e. Assume the equipment is in the MACRS (GDS)five-year property class. Which alternative is preferred? (Use an after-tax, actual dollar analysis and the FW criterion.)
A saltwater disposal system is added to Lease A's gathering system at a cost of $225,000. Assume the following acquisition costs and monthly operating expense fro the motn of May 2018 is $30,000. Case A: The disposal system serves several wells on two different leases. There are 7 wells on lease A and 10 wells on Lease B. Case B: the disposal system serves only the wells on Lease A. Required: Record the acquisition cost and the monthly expenses.
Stellar Drilling Company has leased property on which oil has been discovered. The oil wells on this property produced 18,400 barrels of oil during the past year that sold at an average sales price of $68 per barrel. Total oil resources of this property are estimated to be 227,500 barrels. The lease provided for an outright payment of $614,250 to the lessor (owner) before drilling could be commenced and an annual rental of $33,120. A premium of 5% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Stellar (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is $36,400. From the provisions of the lease agreement, compute the cost per barrel for the past year, exclusive of operating costs, to Stellar Drilling Company. (Round answer to 2 decimal places,…
An environmental soil cleaning company received a contract to remove BTEX contamination from an oil company tank farm site. The contract required the soil cleaning company to provide quarterly invoices for materials and services provided. If the material costs were $140,000 per quarter and the service charges were calculated as an additional 20% of the material costs, what is the present worth of the contract through the 3-year treatment period at an interest rate of 1% per month?
Diderot Drilling Company has leased property on which oil has been discovered. The oil wells on this property produced 18,000 barrels of oil during the past year that sold at an average sales price of $55 per barrel. Total oil resources of this property are estimated to be 250,000 barrels. The lease provided for an outright payment of $500,000 to the lessor (owner) before drilling could be commenced and an annual rental of $31,500. A premium of 5% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Diderot (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is $30,000. Instructions From the provisions of the lease agreement, you are to compute the cost per barrel for the past year, exclusive of operating costs, to Diderot Drilling Company. (Round to…
United Banking Corporation leases its corporate headquarters building. This lease costis fixed with respect to the company's sales volume. In a recent month in which thesales volume was 32,000 units, the lease cost was $716,800.To the nearest whole dollar, what should be the total lease cost at a sales volume of30,900 units in a month? (Assume that this sales volume is within the relevant range.)A. $692,160B. $704,480C. $716,800D. $742,317 Give workings for your answer
Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and 60 1 Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $bl. The rovalty interest is and the severance tax rate is 10%. b Prepare the revenue entries for Cameron Oil Company and Garcia Company. Well Days Produced 30 26 24 Liberty Well 1 Freedom Well A-1 Total Production Sold 2,900-measured at point of delivery 24-Hr Test (bbl) 20 35 Dyson Powell 50 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%. Prepare the revenue entries for Cameron Oil Company and Garcia Company.
United Banking Corporation leases its corporate headquarters building. This lease cost is fixed with respect to the company's sales volume. In a recent month in which the sales volume was 32,000 units, the lease cost was $716,800. To the nearest whole do llar, what should be the total lease cost at a sales volume of 30,900 units in a month? (Assume that this sales volume is within the relevant range
Atlanta Capital Leasing Company (ACLC) leases tractors to construction companies. The firm wants to set a three-year lease payment schedule for a tractor purchased at $53,000 from the equipment manufacturer. The asset is classified as a five-year MACRS property. The tractor is expected to have a salvage value of $22,000 at the end of three years of rental. ACLC will require the lessee to make a security deposit of $1,500 that is refundable at the end of the lease term. ACLC's marginal tax rate is 35%. If ACLC wants an after-tax return of 10%, what lease payment schedule should be set'?
Assume the following data for the following wells commingled production tanks on the Wilmington Ranch located in LaVaca County, Texas. Measured production is 2,228 barrels from Lease C and 2,280 barrels from Lease D. After treatment at the central tank battery, 4,500 barrels are sold. Lease C Wells Well 1 24-Hr Test (bbl) 30 Days Produced 28 Well 2 40 30 Lease D Wells 24-Hr Test (bbl) Days Produced Well 1 20 30 Well 2 35 30 Well 3 50 26 Current Spot Oil Price Severance Tax Rate $46.00/bbl 5% Working Interest Royalty interest 100% 1/8th Prepare entries recognizing revenue at time of sale if the OPERATOR assumes the responsibility of distributing severance taxes and royalty. English (United States)
Saturday Corporation is in the business of leasing new sophisticated equipment. The lessor expects a 12% return on net investment. All leases are classified as direct lease. At the end of the lease term, the equipment will revert to the lessor. At the beginning of current year, an equipment is leased to a lessee with the following information: Cost of equipment to the lessor P5,000,000 Residual value — unguaranteed 600,000 Annual rental payable in advance at the beginning of each year 900,000 Initial direct cost incurred by the lessor 250,000 Useful life and lease term 8 years Implicit interest rate 12% What is the total unearned interest income?
In a cost center, the manager has responsibility and authority for making decisions that affect a. costs b. investments in assets c. both costs and revenues d. revenues Keating Co. is considering disposing of equipment with a cost of $68,000 and accumulated depreciation of $47,600. Keating Co. can sell the equipment through a broker for $27,000 less 8% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $46,000. Keating will incur repair, insurance, and property tax expenses estimated at $10,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is a. $11,160 b. $7,812 c. $16,740 d. $13,392 If sales are $828,000, variable costs are 68% of sales, and operating income is $278,000, what is the contribution margin ratio? a. 64% b. 36% c. 68% d. 32%

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