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Intermediate Accounting
On August 15, 2019, Outkast Co. invested idle cash by

On August 15, 2019, Outkast Co. invested idle cash by purchasing a call option on Counting Crows

Question:

On August 15, 2019, Outkast Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $360. The notional value of the call option is 400 shares, and the option price is $40. The option expires on January 31, 2020. The following data are available with respect to the call option.

Instructions

Prepare the journal entries for Outkast for the following dates.

a. Investment in call option on Counting Crows shares on August 15, 2019.

b. September 30, 2019?Outkast prepares financial statements.

c. December 31, 2019?Outkast prepares financial statements.

d. January 15, 2020?Outkast settles the call option on the Counting Crows shares.

Transcribed Image Text:

Market Price of Counting Crows Shares $48 per share 46 per share 47 per share Time Value of Call Option Date September 30, 2019 December 31, 2019 January 15, 2020 $180 65 30

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a August 15 2019 Call Option 360 Cash 360 b September 30 2019 Call Option 3200 U...View the full answer

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Related Book For answer-question

Intermediate Accounting

ISBN: 978-1119503668

17th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel

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Question Posted: Dec 04, 2019 07:49 AM

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