Brondon Corp. purchased a put option on Mykia common shares on July 7, 2014, for $480. The put option is for 350 shares, and the strike price is $50. The option expires on January 31, 2015. The following data are available with respect to the put option:
Date Fair Value of Option Market Price of Mykia Shares
Sept. 30, 2014 ................ $250 ......................................... $56 per share
Dec. 31, 2014 ................. $100 ........................................ $58 per share
Jan. 31, 2015 .................... $ 0 ........................................ $62 per share
Instructions
Prepare the journal entries for Brondon Corp. for the following dates:
(a) July 7, 2014: Invests in put option on Mykia shares.
(b) September 30, 2014: Brondon prepares financial statements.
(c) December 31, 2014: Brondon prepares financial statements.
(d) January 31, 2015: Put option expires.