(Put Option) Johnstone Co. purchased a put option on Ewing common shares on July 7, 2006, for $240. The put option is for 200 shares, and the strike price is $70. The option expires on January 31, 2007. The following data are available with respect to the put option.

Instructions Prepare the journal entries for Johnstone Co. for the following dates.

(a) January 7, 2006—Investment in put option on Ewing shares.

(b) September 30, 2006—Johnstone prepares financial statements.

(c) December 31, 2006—Johnstone prepares financial statements.

(d) January 31, 2007—Put option expires.

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Date September 30, 2006 December 31, 2006 January 31, 2007 Market Price of Ewing Shares Time Value of Put Option $77 per share 75 per share 78 per share $125 50 0