The treasurer of Hing Wa Corp. has read on the Internet that the stock price of Ewing Inc. is about to take off. In order to profit from this potential development, Hing Wa purchased a call option on Ewing common shares on July 7, 2011, for $240. The call option is for 200 shares (notional value), and the strike price is $70. The option expires on January 31, 2012. The following data are available with respect to the call option:

Instructions
Prepare the journal entries for Hing Wa for the following dates:
(a) July 7, 2011: Investment in call option on Ewing shares.
(b) September 30, 2011: Hing Wa prepares financial statements.
(c) December 31, 2011: Hing Wa prepares financial statements.
(d) January 4, 2012: Hing Wa settles the call option net on the Ewing shares (i.e., without buying the shares).

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Date Sept. 30, 2011 Dec. 31, 2011 Jan. 4, 2012 Fair Value of Option $1,340 $825 $1,200 Market Price of Ewing Shares $77 per share $75 per share $76 per share