Warren Co. purchased a put option on Echo common shares on January 7, 2020, 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, 2020. The following data are available with respect to the put option. Date   Market Price of Echo Shares   Time Value of Put Option March 31, 2020   $80 per share   $200 June 30, 2020    82 per share    90 July 6, 2020    77 per share    25 Instructions Prepare the journal entries for Warren Co. for the following dates.  a. January 7, 2020—Investment in put option on Echo shares.  b. March 31, 2020—Warren prepares financial statements.  c. June 30, 2020—Warren prepares financial statements.  d. July 6, 2020—Warren settles the put option on the Echo shares.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Warren Co. purchased a put option on Echo common shares on January 7, 2020, 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, 2020. The following data are available with respect to the put option.

Date   Market Price of Echo Shares   Time Value of Put Option
March 31, 2020   $80 per share   $200
June 30, 2020    82 per share    90
July 6, 2020    77 per share    25
Instructions

Prepare the journal entries for Warren Co. for the following dates.

 a. January 7, 2020—Investment in put option on Echo shares.

 b. March 31, 2020—Warren prepares financial statements.

 c. June 30, 2020—Warren prepares financial statements.

 d. July 6, 2020—Warren settles the put option on the Echo shares.

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