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Required information On August 1, 2022, a company purchased a call option on shares of NMV stock for speculative purposes. The contract was for 100
Required information On August 1, 2022, a company purchased a call option on shares of NMV stock for speculative purposes. The contract was for 100 shares at a strike price of $125 per share, with an expiration date of October 31, 2022. The option contract premium was $40. On September 30, a market appraisal estimated time value of the option to be $27. The company settled the option contract on October 5 (assume cash settlement), on which date time value was estimated to be $20. Prices of NMV stock during the option period are provided below. August September 30 Price per share of stock: Use the information above to answer the questions below. October 5 $139 $125 $135 The journal entry for settlement of the option on October 5 will include a (Click to select) credit to Call Option for $1,420 debit to Cash for $1,420 debit to Cash for $1,380 credit to Call Option for $1,400
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