The Assistant Treasurer of Ingenuity Ltd. has read on the Internet that the stock price of Papillon Inc. is about to take off. In order to profit from this potential development, Ingenuity purchased a call option on Papillon common shares on July 7, 2017 for $480. The call option is for 240 shares (notional value), and the strike price is $80. The option expires on January 31, 2018. The following data are available with respect to the call option

Date Fair Value of Option Market Price of Papillon Shares

Sept 30, 2017 $1,780 $86 per share

Dec 4, 2018 $965 $83 per share

Jan 4, 2018 $1,550 $85 per share

Prepare the journal entries for Ingenuity for the following dates: (a) July 7, 2017: Invests in call option on Papillon shares. (b) September 30, 2017: Ingenuity prepares financial statements. (c) December 31, 2017: Ingenuity prepares financial statements. (d) January 4, 2018: Ingenuity settles the call option net on the Papillon shares.

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