Yates Co. Purchased a put option on Dixon common shares on January 7, 2014, for $270. The put option is for 300 shares, and the strike price is $64. The option expires on July 31, 2014. The following data are available with respect to the put option: Date Market Price of Dixon shares Time Value of Put Option March 31, 2014 $60 per share $150 June 30, 2014 $62 per share 68 July 6, 2014 $58 per share 20 Required: Prepare the journal entries for Yates Co. for the following dates: January 7, 2014-Investment in put option on Dixon shares. March 31, 2014-Yates prepares financial statements. June 30, 2014-Yates prepares financial statements. July 6, 2014- Yates settles the put option on the Dixon shares.
Yates Co. Purchased a put option on Dixon common shares on January 7, 2014, for $270. The put option is for 300 shares, and the strike price is $64. The option expires on July 31, 2014. The following data are available with respect to the put option: Date Market Price of Dixon shares Time Value of Put Option March 31, 2014 $60 per share $150 June 30, 2014 $62 per share 68 July 6, 2014 $58 per share 20 Required: Prepare the journal entries for Yates Co. for the following dates: January 7, 2014-Investment in put option on Dixon shares. March 31, 2014-Yates prepares financial statements. June 30, 2014-Yates prepares financial statements. July 6, 2014- Yates settles the put option on the Dixon shares.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Yates Co. Purchased a put option on Dixon common shares on January 7, 2014, for $270. The put option is for 300 shares, and the strike price is $64. The option expires on July 31, 2014. The following data are available with respect to the put option:
Date Market Price of Dixon shares Time Value of Put Option
March 31, 2014 $60 per share $150
June 30, 2014 $62 per share 68
July 6, 2014 $58 per share 20
Required:
Prepare the
- January 7, 2014-Investment in put option on Dixon shares.
- March 31, 2014-Yates prepares financial statements.
- June 30, 2014-Yates prepares financial statements.
- July 6, 2014- Yates settles the put option on the Dixon shares.
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