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Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2024 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1 2 3 Cash Outflow $ 300,000 400,000 600,000 To aid extraction, Jackpot purchased some new equipment on July 1, 2024, for $120,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%. Required: 1. Determine the cost of the copper mine. 2. Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Required 1 Probability 25% Complete this question by entering your answers in the tabs below. ¡ View transaction list 40% 35% Required 2 Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest whole dollars. Ⓒ No 1 Transaction 1 View journal entry worksheet General Journal Copper mine Cash Asset retirement liability Debit 1,903,939 Credit 1,600,000 303,939

Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2024 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1 2 3 Cash Outflow $ 300,000 400,000 600,000 To aid extraction, Jackpot purchased some new equipment on July 1, 2024, for $120,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%. Required: 1. Determine the cost of the copper mine. 2. Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Required 1 Probability 25% Complete this question by entering your answers in the tabs below. ¡ View transaction list 40% 35% Required 2 Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest whole dollars. Ⓒ No 1 Transaction 1 View journal entry worksheet General Journal Copper mine Cash Asset retirement liability Debit 1,903,939 Credit 1,600,000 303,939

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2024 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1 2 3 Cash Outflow $ 300,000 400,000 600,000 To aid extraction, Jackpot purchased some new equipment on July 1, 2024, for $120,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%. Required: 1. Determine the cost of the copper mine. 2. Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Complete this question by entering your answers in the tabs below. Required 1 Probability 25% 40% 35% i Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest whole dollars. Required 2 View transaction list No 1 Transaction 1 View journal entry worksheet General Journal Copper mine Cash Asset retirement liability < Required 1 Required 2 > Debit 1,903,939 Credit 1,600,000 303,939 Ⓒ
Transcribed Image Text:Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,000,000 in 2024 for the mining site and spent an additional $600,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) 1 2 3 Cash Outflow $ 300,000 400,000 600,000 To aid extraction, Jackpot purchased some new equipment on July 1, 2024, for $120,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%. Required: 1. Determine the cost of the copper mine. 2. Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Complete this question by entering your answers in the tabs below. Required 1 Probability 25% 40% 35% i Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations. Round your answers to the nearest whole dollars. Required 2 View transaction list No 1 Transaction 1 View journal entry worksheet General Journal Copper mine Cash Asset retirement liability < Required 1 Required 2 > Debit 1,903,939 Credit 1,600,000 303,939 Ⓒ
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How is the total cost of the mine $3,173,705 and not $1,903,941?

 

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