Question
IheartheUnionBuildingisupforsale,saidBethBeyer. Yep,answeredCarlCellar.Youcanhaveittodayforapricethat'sarealsteal-only$1,000,000.Wantit? Couldbe.Nottoday,butmaybesometimesoon.Wanttosellmeasix-monthoptiontobuyatthatfigure? Surewould,butwithtwo conditions.One,norefundoftheoptionfeeifyoudon'texercise.Two,noapplyingittothepurchasepriceifyoudo.Six-monthpurchaseoptiontopurchasethe Unionfor$1,000,000;optionfee,$15,000incash. Comeon,Cellar-$15,000withthoseconditions?Tenthousanddollarsistops,andI'llwriteyouacheckhereandnow. OK,Beyer,you'vegotyourselfanoption. ** a.CellarmustdebitCash,butwhatshouldhe credit? b.BeyermustcreditCash,butwhatshouldshedebit?
"IheartheUnionBuildingisupforsale,"saidBethBeyer.
"Yep,"answeredCarlCellar."Youcanhaveittodayforapricethat'sarealsteal-only$1,000,000.Wantit?"
"Couldbe.Nottoday,butmaybesometimesoon.Wanttosellmeasix-monthoptiontobuyatthatfigure?"
"Surewould,butwithtwo conditions.One,norefundoftheoptionfeeifyoudon'texercise.Two,noapplyingittothepurchasepriceifyoudo.Six-monthpurchaseoptiontopurchasethe Unionfor$1,000,000;optionfee,$15,000incash."
"Comeon,Cellar-$15,000withthoseconditions?Tenthousanddollarsistops,andI'llwriteyouacheckhereandnow."
"OK,Beyer,you'vegotyourselfanoption."
**
a.CellarmustdebitCash,butwhatshouldhe credit?
b.BeyermustcreditCash,butwhatshouldshedebit?
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