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)
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)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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)
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