AXA quiz 10.1

Requirement 1:

Record the Journal entries as follow:

Paid $ 2,100,000 cash for the right to work a mine that contained an estimated 180,000 tons of ore

The company paid $60,000 to remove unwanted buildings from the land.

The company paid $70,000 to prepare the surface for mining.

Safe energy also signed a $20,000 note payable to a landscaping company to return the land surface to its original condition after the lease ends

During the first year, Safe EnergySafe Energy removed 30,000 tons of ore. Record the entry for depletion.

Safe Energy sold 22,800 tons of ore on account for $30 per ton. Begin by recording the sale. (Do not yet record the cost of goods sold related to this sale. We will do this in the following journal entry.)

Now record the cost of sales.

Operating expenses for the first year totaled $240,000, all paid in cash.

The company accrued income tax at the tax rate of 25%.

Requirement 2:

Mid Pacific Energy Company's balance sheet includes the asset Iron Ore Rights. Mid Pacific Energy paid $2.1 million cash for the right to work a mine that contained an estimated 180,000 tons of ore. The company paid $60,000 to remove unwanted buildings from the land and $70,000 to prepare the surface for mining. Mid Pacific Energy also signed a $20,000 note payable to a landscaping company to return the land surface to its original condition after the rights to work the mine end. During the first year, Mid Pacific Energy removed 30,000 tons of ore, of which it sold 22,800 tons on account for $30 per ton. Operating expenses for the first year totaled $240,000, all paid in cash. In addition, the company accrued income tax at the tax rate of 25%. i Requirements 1. 2. Record all of Mid Pacific Energy's transactions for the year. Round depletion per unit to the closest cent. Prepare the company's single-step income statement for its iron ore operations for the first year. Evaluate the profitability of the company's operations. What balances should appear from these transactions on Mid Pacific Energy's balance sheet at the end of its first year of operations? 3. Print Done Income Statement-Iron Ore Operations Year 1 Net income (loss) Requirement 3. What balances should appear from these transactions on Safe Energy's balance sheet at the end of its first year of operations? (For the purpose of this requirement, ignore the effect of the transactions on the cash account.)