Warren Co. purchased a put option on Echo ordinary shares on January 7, 2022, for $360. The put option is for 400 shares, and the strike price is $85 (which equals the price of an Echo share on the purchase date). The option expires on July 31, 2022. The following data are available with respect to the put option.

Instructions

Prepare the journal entries for Warren for the following dates.

a. January 7, 2022—Investment in put option on Echo shares.

b. March 31, 2022—Warren prepares financial statements.

c. June 30, 2022—Warren prepares financial statements.

d. July 6, 2022—Warren settles the put option on the Echo shares.

Transcribed Image Text:

Date Market Price of Eco Shares Time Value of Put Option March 31, 2022 €80 per share €200 June 30, 2022 82 per share 90 July 6, 2022 77 per share 25