Johnstone Co. purchased a put option on Ewing common shares on July 7, 2020, for $240. The
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Johnstone Co. purchased a put option on Ewing common shares on July 7, 2020, for $240. The put option is for 200 shares, and the strike price is $70. (The market price of a share of Ewing stock on that date is $70.) The option expires on January 31, 2021. The following data are available with respect to the put option.
Instructions
Prepare the journal entries for Johnstone Co. for the following dates.
a. July 7, 2020?Investment in put option on Ewing shares.
b. September 30, 2020?Johnstone prepares financial statements.
c. December 31, 2020?Johnstone prepares financial statements.
d. January 31, 2021?Put option expires.
Strike PriceIn finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
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Related Book For
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
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