Falcon Gas Inc. and Ike Gas Co. jointly own the Javelina Field. Falcon Gas Inc....
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Falcon Gas Inc. and Ike Gas Co. jointly own the Javelina Field. Falcon Gas Inc. owns 60% of the working interest and is the operating company. Ike Gas Co. owns 40% of the working interest. There is also a 1/8 royalty interest on the field. During this month, 120,000 Mcf was delivered to the purchasers of Falcon Gas Inc. and 75,000 Mcf was delivered to the purchasers of Ike Gas Co. The price of gas is $5.00/Mcf. Under the sales method, Falcon Gas Inc. should recognize in this month gas revenues of: A. $0. B. $525,000. C. $585,000. D. $600,000.
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