Aylmer Inc paid $520 for a call to purchase 850 shares of Belmont Inc on April 1, Y3.
The strike price was $26.50 per share and could be exercised anytime in the next 6 months.
On April 1, Y3, the market price for one share of Belmont Inc. was $29.30.
Belmont's stock price rose. On June 30, Y3, the price for Belmont stock was $31.55 per share.
The fair value of the option on June 30, Y3 was $7,365.
REQUIRED
Prepare the appropriate entries under two different scenarios:
1) Aylmer exercised the option
2) Aylmer did not exercise the option (just the June 30th entry)

Answer rating: 100% (QA)

1Debit Cash 850 x 2650 22525 Credit Belmont Inc 850 x 2930 24905 2 Ayl... View the full answer