Warren Co. purchased a put option on Echo common shares on January 7, 2012, for $360. The

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Warren Co. purchased a put option on Echo common shares on January 7, 2012, 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, 2012. The following data are available with respect to the put option.

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InstructionsPrepare the journal entries for Warren Co. for the following dates.(a) January 7, 2012??Investment in put option on Echo shares.(b) March 31, 2012??Warren prepares financial statements.(c) June 30, 2012??Warren prepares financial statements.(d) July 6, 2012??Warren settles the put option on the Echoshares.

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.
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Intermediate Accounting

ISBN: 978-0470587287

14th Edition

Authors: kieso, weygandt and warfield.

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