Question:54 Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,150,000 in 2018 for the mining site and spent an additional $630,000 to prepare the mine for the extraction of the copper. After the copper is extracted in approximately 4 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: Cash Outflow Probability 1 $3,30,000 25% 2 4,30,000 40% 3 6,30,000 35% To aid extraction, Jackpot purchased some new equipment on July 1, 2018, for $150,000. After the copper is removed from this mine, the equipment will be sold. The credit- adjusted, risk-free rate of interest is 10%.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. The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows. Preferred Stock (8%, $100 par noncumulative, 5,400 Common Stock ($5 stated value, 303,000 shares Paid-in Capital in Excess of Par Value - Preferred Stock Paid-in Capital in Excess of Stated Value - Common Retained Earnings Treasury Stock - Common (5,400 shares) $ 3,24,000 $ 10,90,00 $ 18,570 $ 4,82,820 $ 6,92,430 $ 43,200 During 2010 the corporation had these transactions and events pertaining to its stockholders' equity. Feb Issued 5,400 shares of common stock for $32,400. Mar Purchased 1,130 additional shares of common treasury stock at Oct Declared a 8% cash dividend on preferred stock, payable Nov Paid the dividend declared on October 1. Dec Declared a $0.80 per share cash dividend to common .1 stockholders of record on December 15, payable December 31, Dec Determined that net income for the year was $281,483. Paid the Required:Journalize the transactions.
Question:54 Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,150,000 in 2018 for the mining site and spent an additional $630,000 to prepare the mine for the extraction of the copper. After the copper is extracted in approximately 4 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: Cash Outflow Probability 1 $3,30,000 25% 2 4,30,000 40% 3 6,30,000 35% To aid extraction, Jackpot purchased some new equipment on July 1, 2018, for $150,000. After the copper is removed from this mine, the equipment will be sold. The credit- adjusted, risk-free rate of interest is 10%.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. The stockholders' equity accounts of Sigma Corporation on January 1, 2010, were as follows. Preferred Stock (8%, $100 par noncumulative, 5,400 Common Stock ($5 stated value, 303,000 shares Paid-in Capital in Excess of Par Value - Preferred Stock Paid-in Capital in Excess of Stated Value - Common Retained Earnings Treasury Stock - Common (5,400 shares) $ 3,24,000 $ 10,90,00 $ 18,570 $ 4,82,820 $ 6,92,430 $ 43,200 During 2010 the corporation had these transactions and events pertaining to its stockholders' equity. Feb Issued 5,400 shares of common stock for $32,400. Mar Purchased 1,130 additional shares of common treasury stock at Oct Declared a 8% cash dividend on preferred stock, payable Nov Paid the dividend declared on October 1. Dec Declared a $0.80 per share cash dividend to common .1 stockholders of record on December 15, payable December 31, Dec Determined that net income for the year was $281,483. Paid the Required:Journalize the transactions.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 6PA: Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one...
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Transcribed Image Text:Question:54
Jackpot Mining Company operates a copper mine in
central Montana. The company paid $1,150,000 in 2018 for
the mining site and spent an additional $630,000 to
prepare the mine for the extraction of the copper. After the
copper is extracted in approximately 4 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:
Cash Outflow
Probability
1
$3,30,000
25%
2
4,30,000
40%
3
6,30,000
35%
To aid extraction, Jackpot purchased some new equipment
on July 1, 2018, for $150,000. After the copper is removed
from this mine, the equipment will be sold. The credit-
adjusted, risk-free rate of interest is 10%.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. The stockholders' equity accounts of Sigma
Corporation on January 1, 2010, were as follows.
Preferred Stock (8%, $100 par noncumulative, 5,400
Common Stock ($5 stated value, 303,000 shares
Paid-in Capital in Excess of Par Value - Preferred Stock
Paid-in Capital in Excess of Stated Value - Common
Retained Earnings
Treasury Stock - Common (5,400 shares)
$ 3,24,000
$ 10,90,00
$ 18,570
$ 4,82,820
$ 6,92,430
$ 43,200
During 2010 the corporation had these transactions and
events pertaining to its stockholders' equity.
Feb Issued 5,400 shares of common stock for $32,400.
Mar Purchased 1,130 additional shares of common treasury stock at
Oct Declared a 8% cash dividend on preferred stock, payable
Nov Paid the dividend declared on October 1.
Dec Declared a $0.80 per share cash dividend to common
.1
stockholders of record on December 15, payable December 31,
Dec Determined that net income for the year was $281,483. Paid the
Required:Journalize the transactions.
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