Question
On June 1, 2018, DCI purchased a call option for $450, which gave it the right to buy 10,000 shares of iLines, Inc., for $54
On June 1, 2018, DCI purchased a call option for $450, which gave it the right to buy 10,000 shares of iLines, Inc., for $54 each until December 1, 2018 . On that date, iLines' shares were being traded for $52. On June 30, 2018, the option contract could be traded in the market at $96,000. On December 1, 2018, with the shares being traded at $70 each, DCI exercised the option and took delivery of the shares of iLines.
You are required to record all necessary entry/entries related to this option on:
a] June 1, 2018 when DCI acquired the call option.
b] June 30, 2018, when DCI closed its books of accounts.
c] December 1, 2018 assuming DCI exercises the call option and takes delivery of the shares of iLynes.
d] December 1, 2018, assuming DCI settles the call option for cash without taking delivery of the iLynes shares
Wherever no entry is needed, write "No entry necessary".
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started