Spring2009- Exam 2

Spring2009- Exam 2 - ACCOUNTANCY 321 Spring, 2009 EXAM II...

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Unformatted text preview: ACCOUNTANCY 321 Spring, 2009 EXAM II circle one: 9:00 a.m. class 1:00 p.m. class Name ________________________________ Internal Group # ___________ Professors Bob Capettini and Will Snyder 1. There are 15 pages and 4 questions (each with several subparts) on the exam. Question I 16 points Question II 33 points Question III 30 points Question IV 21 points 2. For the essay questions, make your answers clear and specific. BE SURE TO ANSWER THE QUESTION WHICH IS ASKED (not some other question on the same topic). 3. Questions will be graded for PARTIAL CREDIT. You may receive partial credit ONLY FOR WRITTEN WORK we can follow. 4. DO NOT remove any pages from your test. 5. DO all of your work on this exam. DO NOT use any other sheets for scrap paper (other than your notes, WHICH MUST BE TURNED IN WITH YOUR EXAM). 6. You are expected to do your own work. 7. You will have two hours to take the exam. 1 I. On March 1, 2007, Hammond Company (a 12/31 fiscal year firm) signed a long term purchase contract to buy crude oil from a Middle East producer for $70 per barrel. Under these terms, Hammond must take delivery of the 3,000,000 barrels of crude oil and pay $210,000,000 to the producer in the next four years (by March 1, 2011). On July 31, 2007 the market price hit $145 per barrel. On December 31, 2007, the market price had dropped to $30 per barrel. On December 31, 2009, the market price had recovered to $50 per barrel. As of December 31, 2009, no crude oil had been received by the Hammond Company. A. (3 points) 1. How is the signing of the contract treated by Hammond Company on March 1, 2007? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ 2. Why is it treated this way? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ 3. Record any necessary journal entries. ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ 2 B. Record the journal entry Hammond Company makes on December 31, 2007. (2 points) ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ C. What is the justification for making the journal entry on December 31, 2007? (2 points) ____________________________________________________________________________ ____________________________________________________________________________...
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Spring2009- Exam 2 - ACCOUNTANCY 321 Spring, 2009 EXAM II...

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