Maynard Corporation buys 1,000 call options to buy 1,000 shares of Rossman, Inc., common stock on December 1, 20X1. At the time of the purchase, the option price is $5.00, the Rossman stock price is $30.00, and the exercise price is $32.00. On December 31, 20X1, the option price is $5.90 and the stock price is $36.00.

Required:

1. Identify the derivative, the underlying, and the notional value.

2. Assume that the derivative is accounted for as a stand-alone derivative. What journal entries would Maynard Corporation make during 20X1 to record the effects of the option purchase?