Exercise 17-27

On August 15, 2016, Buffalo Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $720. The notional value of the call option is800shares, and the option price is $80. The option expires on January 31, 2017. The following data are available with respect to the call option.

Exercise 17-27 On August 15, 2016, Buffalo Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $720. The notional value of the call option is 800 shares, and the option price is $80. The option expires on January 31, 2017. The following data are available with respect to the call option. Market Price of Counting Crows Shares Time Value of Call Option September 30, 2016 $96 per share $360 December 31, 2016 $92 per share 130 January 15, 2017 $94 per share 60 Date Prepare the journal entries for Buffalo for the following dates. (a) Investment in call option on Counting Crows shares on August 15, 2016. (b) September 30, 2016Buffalo prepares financial statements. (c) December 31, 2016Buffalo prepares financial statements. (d) January 15, 2017Buffalo settles the call option on the Counting Crows shares. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No . Date Account Titles and Explanation (a) (b) (To record the change in intrinsic value.) (To record the time value change.) (c) Debit Credit (To record the change in intrinsic value.) (To record the time value change.) (d) (To record the time value change.) (To record settlement of call option.)