What to do if, 100% Gross Revenue is not received by you, the operator?
Some operators only receive W.I revenue. Royalty and override revenue is disbursed to those owners by the purchaser not the operator. The W.I. owners should receive their N.R.I. for revenue of the gross revenue and taxes. Entering the net revenue received by the operator would necessitate inflating the N.R.I. percents in the DOI File for all W.I. owner’s.
Set up the DOI file for 100% expenses for W.I. owner’s. To enter gross revenue and taxes use an owner number from 99990-99999 for the total percent of all royalty and override owners disbursed to by the purchaser like 25%. W.I. owners only receive 75% (N.R.I.) of the gross revenue.
In this example, we would add owner number 99990 with the name as deleted owner or royalty and override owner’s. Add this owner in the DOI File with revenue and tax percent of 25%. This owner has no expense interest. This owner is not the company. This 25% is the balancing factor for the DOI File to equal 100%.
Suppose we have gross revenue of $1,000.00, gross severance tax of $200.00, and receive a net revenue check amount of $600.00.
In the Company Chart of Accounts file, add general ledger number 76325 with the description as revenue disbursed by purchaser. In the general ledger transaction file or run check entry post gross revenue as follows:
Credit 31010 -Oil Sales for $1000.00 (Gross Oil Sales)
Debit 51010 - Severance Tax for 200.00 (Gross Taxes)
Debit 76325 - Rev. Disbursed by Purchaser 200.00
Debit 11010 - Cash Account for net check 600.00
The above entries makes all credit and debit posting balance to the general ledger. When Operating Statements are updated, the update program will credit the cash general ledger account for $600.00, debit general ledger account 76330 (Revenue Distribution) for $600.00. This is 75% of the $1,000.00 less 200.00 taxes. No transaction is made for the hard coded owner number 99990. His share, $200.00 (25% of $1,000.00 revenue less $200.00 tax) was posted to general ledger account 76325, revenue disbursed by purchaser when you entered above transactions. If the purchaser does not withhold taxes from your revenue check, set up a payable for the taxes.
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