Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,300,000 in 2021 for the mining site and spent an additional $660,000 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: (FV of $1, PV of $1, FVA of $1, PVA of $1 FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Cash Outflow Probability 203 $360,000 460,000 660,000 2 45 35% To aid extraction, Jackpot purchased some new equipment on July 1, 2021, for $180,000. After the copper is removed from this mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 12 % 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the cost of the copper mine. (Do not round intermediate calculations. Round your answer to the nearest whole dollar.) $ 324,105 Cost of copper mine Required 1 Required 2> Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,300,000 in 2021 for the mining site and spent an additional $660,000 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: (FV of $1, PV of $1, FVA of $1, PVA of $1 FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Probability Cash Outflow $360,000 460,000 660,000 1 208 45 35 2 To aid extraction, Jackpot purchased some new equipment on July 1, 2021, for $180,000. After the copper is removed from this mine the equipment will be sold. The credit-adjusted, risk-free rate of interest is 12 % 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment. (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 Transaction General Journal Debit Credit 2,284,105 x Copper mine Cash 1,960,000 Asset retirement liability 324,105 Required 1 Required 2
