Beyer buys. I hear the Union Building is up for sale, said Beth Beyer. Yep, answered...
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"Beyer buys." "I hear the Union Building is up for sale," said Beth Beyer. "Yep," answered Carl Cellar. "You can have it today for a price that's a real steal only $1,000,000. Want it?" "Could be. Not today, but maybe sometime soon. Want to sell me a six-month option to buy at that figure?" "Sure would, but with two conditions. One, no refund of the option fee if you don't exercise. Two, no applying it to the purchase price if you do. Six-month purchase option to purchase the Union for $1,000,000; option fee, $15,000 in cash." "Come on, Cellar-$15,000 with those conditions? Ten thousand dollars is tops, and I'll write you a check here and now." "OK, Beyer, you've got yourself an option." a. Cellar must debit Cash, but what should he credit? Explain your answer. b. Beyer must credit Cash, but what should she debit? Explain your answer. "Beyer buys." "I hear the Union Building is up for sale," said Beth Beyer. "Yep," answered Carl Cellar. "You can have it today for a price that's a real steal only $1,000,000. Want it?" "Could be. Not today, but maybe sometime soon. Want to sell me a six-month option to buy at that figure?" "Sure would, but with two conditions. One, no refund of the option fee if you don't exercise. Two, no applying it to the purchase price if you do. Six-month purchase option to purchase the Union for $1,000,000; option fee, $15,000 in cash." "Come on, Cellar-$15,000 with those conditions? Ten thousand dollars is tops, and I'll write you a check here and now." "OK, Beyer, you've got yourself an option." a. Cellar must debit Cash, but what should he credit? Explain your answer. b. Beyer must credit Cash, but what should she debit? Explain your answer.
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Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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