On January 2, 2020, Buffalo Company purchases a call option for $270 on Merchant common stock. The call option gives Buffalo the option to buy 1,010 shares of Merchant at a strike price of $53 per share. The market price of a Merchant share is $53 on January 2, 2020 (the intrinsic value is therefore $0). On March 31, 2020, the market price for Merchant stock is $56 per share, and the time value of the option is $180.

a- Prepare the journal entry to record the purchase of the call option on January 2, 2020.

b- Prepare the journal entries to recognize the change in the fair value of the call option as of March 31, 2020.