On April 1, 2021, Petty Ltd. purchased a call option from Fidelity Investments Corporation. The option gave Petty the right to buy 5,000 shares in Monahan Ltd., at a price of $ 50 per share. On the day Petty purchased the option, Monahan shares were trading at $ 50 each. Petty paid $ 1,000 for the options. On April 30, 2021, the Monahan shares were trading at $ 53.50 each, and the options for Monahan shares were trading at $ 18,000. On May 15, Petty settled the options in cash when the Monahan shares were trading at $ 56 and the options were trading at $ 30,000. <\/p>
<\/p>
Instructions<\/p>
a) Prepare the journal entries to record the above transactions. <\/p>
b) Prepare the May 15 journal entry assuming Petty accepted the shares in Monahan instead.<\/p>", "transcribed_text": "", "related_book": { "title": "Intermediate Accounting", "isbn": "470964731, 978-0470964736, 978-0470161012", "edition": "9th Canadian Edition, Volume 2", "authors": "Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/516.jpg", "uri": "\/textbooks\/intermediate-accounting-9th-canadian-edition-volume-2-516", "see_more_uri": "" }, "free_related_book": { "isbn": "B099179HL4", "uri": "\/textbooks\/understanding-digital-marketing-the-principles-of-digital-marketing-explained-simply-and-practically-1st-edition-9798533687973", "name": "Understanding Digital Marketing The Principles Of Digital Marketing Explained Simply And Practically", "edition": "1st Edition" }, "question_posted": "2024-06-29 01:14:42", "see_more_questions_link": "\/study-help\/questions\/business-business-communication-2023-February-20", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/use-the-information-from-be23-4-for-bloom-corporation.", "description": "Use the information from BE23-4 for Bloom Corporation. 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