Johnstone AG purchased a put option on Ewing ordinary shares on July 7, 2022, for €240. The put option is for 200 shares, and the strike price is €70. (The market price of an ordinary share of Ewing on that date is €70.) The option expires on January 31, 2023. The following data are available with respect to the put option.

Instructions

Prepare the journal entries for Johnstone for the following dates.

a. July 7, 2022—Investment in put option on Ewing shares.

b. September 30, 2022—Johnstone prepares financial statements.

c. December 31, 2022—Johnstone prepares financial statements.

d. January 31, 2023—Put option expires.

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Market Price of Ewing Time Value of Put Date Shares Option September 30, €77 per share €125 2022 December 31, 75 per share 50 2022 January 31, 2023 78 per share