Handling operated cash calls can be confusing. This is a brief explanation of how to handle the standard cash call. We also cover many of the non standard situations.

1. Operated Cash Calls
Projects involving multiple partners have budgets defined in an "authorization
for expenditure" document commonly known as an "AFE." Once the AFE is
approved by all partners, the AFE is the authorization for the project to incur
costs on behalf of all partners. Cash calls are generated to invoice partners for
their share of expenses the project is expected to incur on their behalf. This is
usually done when the project is ready to start incurring costs, and in an ideal
situation, all partners will pay the cash call invoice in a timely manner making
the project fully funded.
Cash calls are, in effect, prepayments made by partners for expenses that will
be incurred by the project (AFE). The operator maintains these prepayments
in their “Cash Call Payable” account. Partners maintain these prepayments in
their “Prepaid Cash Calls” account.
The following describes how to properly make cash call entries from the
operators point of view. This includes 2 slides on the standard situation, and
more importantly, several slides on how to handle cash calls when
circumstances require non-standard adjustments.
Operated Cash Calls

2. Making a Standard Cash Call
Cash calls are generated by the operator for each partner. The cash call amount is
equal to the partners percentage of the AFE budget.
The cash call Payable account (6310) must have the AFE and Partner/Vendor as
mandatory. This liability will be drawn down as the project progresses and costs
are incurred and invoiced either through a joint venture bill or standard invoice.
The cash call Receivable account (1425) must have the Partner/Vendor and Invoice
Number/Date as mandatory. This account is then treated like any other receivable
account. For this example we’ll have a cash call of $100.
Entries:
1. Credit cash call Payable CR 6310 – Vendor-Invoice- AFE-$100
2. Debit cash call Receivable DR 1425-Vendor-Invoice-$100
Operated Cash Calls – Standard

3. Payment Received for Amount Invoiced
When the partner pays the cash call the cash call receivable is cleared
and the bank account (1010) debited.
Entries:
1. Credit cash call Receivable CR 1425-Vendor-Invoice-$100
2. Debit bank account DR 1010 - $100
Operated Cash Calls - Standard

4. Partner Pays More than Invoiced Amount
When the partner pays more than the amount invoiced for the cash call, the partner
is cash called for the amount over paid. The cash receipt entries do not change. In
this case the partner overpaid by $100.
Cash Call Entries:
1. Credit cash call Payable - overpayment amount CR 6310 – Vendor-Invoice- AFE- $100
2. Debit cash call Receivable - overpayment amount DR 1425 – Vendor-Invoice- $100
Cash Receipt Entries:
1. Credit cash call Receivable – full amount paid CR 1425 – Vendor-Invoice- $200
2. Debit bank account – full amount paid DR 1010 - $200
Operated Cash Calls – Non Standard

5. Partner Pays Less than Invoiced Amount
When the partner pays less than the amount invoiced for the cash call, a reversal is
made for the amount of the underpayment. The cash receipt entries do not
change. In this case the partner underpaid by $25.
Cash Call Entries:
1. Debit cash call Payable - underpayment amount DR 6310 – Vendor-Invoice- AFE-$25
2. Credit cash call Receivable - underpayment amount CR 1425– Vendor-Invoice-$25
Cash Receipt Entries:
1. Credit cash call Receivable - full amount paid CR 1425– Vendor-Invoice-$75
2. Debit bank account - full amount paid DR 1010 - $75
Operated Cash Calls – Non Standard

6. Refund Cash Call
Once the project has been completed and all expenses have been
accounted for, if the project is under budget a refund may be issued to
the partners. This refund is for $50.
Refund Entries:
1. Debit cash call Payable DR 6310 – Vendor-Invoice- AFE-$50
2. Credit Bank Account CR 1010 - $50
Operated Cash Calls – Non Standard

7. Reverse/Close Cash Call
In the following situations, the $100 cash call may be reversed/closed.
• The project has been put on hold or cancelled with no payment
received
• The partner wishes to pay their share of costs as they occur and has
been cash called with no payment received
Refund Entries:
1. Debit cash call Payable DR 6310 – Vendor-Invoice- AFE-$100
2. Credit cash call Receivable CR 1425-Vendor-Invoice-$100
Operated Cash Calls – Non Standard

8. Cash Call Drawn Down with No Payment Received
These entries are required if the cash call will not be paid. In this case the joint venture
process has drawn down the cash call by $10. We need to move the amount drawn down
from the cash call payable account to the JV receivable account (1420).
Cash Call Reversal Entries:
1. Debit cash call Payable DR 6310 – Vendor-Invoice- AFE- $100
2. Credit cash call Receivable CR 1425-Vendor-Invoice- $100
Move Invoice to Receivable Account Entries:
1. Credit cash call Payable - for the invoiced amount CR 6310 – Vendor-Invoice- AFE- $10
2. Debit JV Receivables - for the invoiced amount DR 1420-Vendor-Invoice- $10
Operated Cash Calls - Non Standard

9. Partner Pays Cash Call then Rescinds Payment
Effectively this is the same as the previous slide in that the cash call has not been paid
and the cash call has been drawn down. Payment may have been made but, for example,
was netted off the next payment received from the partner.
Cash Call Reversal Entries:
1. Debit cash call Payable DR 6310 – Vendor-Invoice- AFE- $100
2. Credit cash call Receivable CR 1425-Vendor-Invoice- $100
Move Invoice to Receivable Account Entries:
1. Credit cash call Payable - for the invoiced amount CR 6310 – Vendor-Invoice- AFE- $10
2. Debit JV Receivables - for the invoiced amount DR 1420-Vendor-Invoice- $10
Operated Cash Calls – Non Standard

10. Transfer Cash Call to a Different AFE
Partner requests balance ($5 in this case) from one AFE to be moved to another AFE.
This may happen when a project has ended with funds outstanding in the cash call
payable account for the partner. These funds may be transferred to another project
instead of being refunded. Here we assume that the new AFE has been cash called
therefore we need to apply the transfer payment to the new cash call invoice.
Cash Call Reversal Entries:
1. Debit cash call Payable - old AFE DR 6310 – Vendor-Invoice- AFE- $5
2. Credit cash call Receivable - new CC Invoice CR 1425-Vendor-Invoice- $5
Operated Cash Calls – Non Standard

11. Partner Sells Interest in Project and Requests Refund
Entries are required if the sale is for the project only. No entries are required if the sale is for
the entire company. The DOI for the AFE will also have to change to reflect the new partner.
These entries are needed if the original partner is to be refunded the remaining cash call
balance ($15) and the new partner cash called for the same amount.
Cash Call Refund Entries:
1. Debit cash call Payable - refund original owner DR 6310 – Vendor-Invoice- AFE- $15
2. Credit general Payable - refund original owner CR 6210-Vendor-Invoice- $15
Cash Call New Partner:
1. Credit cash call Payable CR 6310 – Vendor-Invoice- AFE- $15
2. Debit cash call Receivable DR 1425-Vendor-Invoice- $15
Operated Cash Calls – Non Standard

12. Partner Sells Interest in Project and Transfers Cash Call
Balance to New Partner
Entries are required if the sale is for the project only. No entries are required if the
sale is for the entire company. The DOI for the AFE will also have to change to reflect
the new partner. These entries are needed if the original partner transfers the
remaining cash call balance ($15) to the new partner.
Cash Call Refund Entries:
1. Debit cash call Payable - refund original owner DR 6310 – Vendor-Invoice- AFE- $15
2. Credit cash call Payable - transfer to new partner CR 6310 – Vendor-Invoice- AFE- $15
Operated Cash Calls – Non Standard