On August 15, 2019, Sweet Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $792. The notional value of the call option is 880 shares, and the option price is $88. The option expires on January 31, 2020. The following data are available with respect to the call option.
Date Market price of counting crow share Time value of call option
September 30, 2019 $48 per share $180
December 31, 2019, $46 per share $65
January 15, 2020, $47 per share $30
Prepare the journal entries for Outcast for the following dates.
(a) Investment in a 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.
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On August 15, 2019, Sweet Co. invested idle cash by purchasing a call option on Counting Crows Inc....
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