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Intermediate Accounting Volume 2
The treasurer of Hing Wa Corp. has read that the

The treasurer of Hing Wa Corp. has read that the stock price of Ewing Inc. is about

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The treasurer of Hing Wa Corp. has read that the stock price of Ewing Inc. is about to take off. To profit from this potential development, Hing Wa purchased a call option on Ewing common shares on July 7, 2023, for $480. The call option is for 240 shares (notional value), and the strike price is $80. The option expires on January 31, 2024. The following data are available with respect to the call option:

InstructionsPrepare the journal entries for Hing Wa for the following dates:

a. July 7, 2023: Invests in call option on Ewing shares.

b. September 30, 2023: Hing Wa prepares financial statements.

c. December 31, 2023: Hing Wa prepares financial statements.

d. January 4, 2024: Hing Wa settles the call option net on the Ewing shares (that is, without buying the shares).

Transcribed Image Text:

Date Sept. 30, 2023 Dec. 31, 2023 Jan. 4, 2024 Fair Value of Option $1,780 965 1,550 Market Price of Ewing Shares $86 per share $83 per share $85 per share

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Intermediate Accounting Volume 2

ISBN: 9781119740445

13th Canadian Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy

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Question Posted: Jul 04, 2023 09:21 AM

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