On March 1, 20X2, Mega sells the options at their value on that date and acquires 10,000
Question:
On March 1, 20X2, Mega sells the options at their value on that date and acquires 10,000 barrels of oil at the spot price. On June 1.20X2. Mega sells the oil for \(\$ 34\) per barrel.
\section*{Required}
a. Prepare the journal entry required on November \(30,20 \times 1\), to record the purchase of the call options.
b. Prepare the adjusting journal entry required on December 31, 20X1, to record the change in time and intrinsic value of the options.
c. Prepare the entries required on March \(1,20 \times 2\), to record the expiration of the time value of the options, the sale of the options, and the purchase of the 10.000 barrels of oil.
d. Prepare the entries required on June \(1,20 \mathrm{X} 2\), to record the sale of the oil and any other entries required as a result of the option.
\section*{Required}
a. Prepare the entries required on November 3, 20X2, to record the purchase of the JRS Company stock and the put options.
b. Prepare the entries required on December \(31,20 \mathrm{X} 2\), to record the change in intrinsic value and time value of the options, as well as the revalution of the available-for-sale securities.
c. Prepare the entries required on March 3, 20X3, to record the exercise of the put option and the sale of the securities at that date.
Step by Step Answer:
Advanced Financial Accounting
ISBN: 9780072444124
5th Edition
Authors: Richard E. Baker, Valdean C. Lembke, Thomas E. King