On January 2, 2025, Pearl Company purchases a call option for $300 on Merchant common stock. The call option gives Pearl the option to buy 940 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2025 (the intrinsic value is therefore $0). On March 31, 2025, the market price for Merchant stock is $53 per share, and the time value of the option is $180. (a) Prepare the journal entry to record the purchase of the call option on January 2, 2025. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the

On January 2, 2025, Pearl Company purchases a call option for $300 on Merchant common stock. The call option gives Pearl the option to buy 940 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2025 (the intrinsic value is therefore $0). On March 31, 2025, the market price for Merchant stock is $53 per share, and the time value of the option is $180. (a) Prepare the journal entry to record the purchase of the call option on January 2, 2025. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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