Just as Dan dies after having been fatally shot, he coughs up some blood, which globs on his upper lip. A couple of scenes later, when the sheriff is investigating the crime scene, Dan body lies under a cover. Blood has run from the corner of his lips, but the blood on his upper lip is now gone.
Kayce shot Teal in cold blood and tried to create a forensic scenario where Teal died in a gunfight and Kayce killed him in self-defense. He should have fired the gun in Teal's hand so that the powder burns from the gun fall on Teal's person and line-up with Kayce's constructed narrative.