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Brondon Corp. purchased a put option on Mykia common shares

Brondon Corp. purchased a put option on Mykia common shares on July 7, 2020, for $480. The

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Brondon Corp. purchased a put option on Mykia common shares on July 7, 2020, for $480. The put option is for 350 shares, and the strike price is $50. The option expires on January 31, 2021. The following data are available with respect to the put option:

Date Fair Value of Option Market Price of Mykia Shares Sept. 30, 2020 $250 $56 per share Dec. 31, 2020 100 $58 per share Jan. 31, 2021 $62 per share

Instructions Prepare the journal entries for Brondon Corp. for the following dates:

a. July 7, 2020: Invests in put option on Mykia shares.

b. September 30, 2020: Brondon prepares financial statements.

c. December 31, 2020: Brondon prepares financial statements.

d. January 31, 2021: Put option expires.

Transcribed Image Text:

Date Fair Value of Option Market Price of Mykia Shares Sept. 30, 2020 $250 $56 per share Dec. 31, 2020 100 $58 per share Jan. 31, 2021 $62 per share

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Intermediate Accounting Volume 2

ISBN: 9781119497042

12th 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 02, 2020 03:04 AM

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Brondon Corp. purchased a put option on Mykia common shares on July 7, 2020, for $480. The

Question:

Date Fair Value of Option Market Price of Mykia Shares Sept. 30, 2020 $250 $56 per share Dec. 31, 2020 100 $58 per share Jan. 31, 2021 $62 per share

Step by Step Answer:

a July 7 2020 Derivatives Financial AssetsLiabilities 480 Cash ...View the full answer

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