Warren Co purchased a put option on Echo ordinary shares on January 7, 2019, for $360 The put option is for 400 shares, and the strike price is $85 (which equals the price of an Echo share on the purchase date) The option expires on July 31, 2019 The following data are available with respect to the...

a January 7 2019 Put Option 360 Cash 360 b March 31 2019 Put Optio ...

Warren Co. purchased a put option on Echo ordinary shares on January 7, 2019, for $360. The

Question:

Warren Co. purchased a put option on Echo ordinary shares on January 7, 2019, for $360. The put option is for 400 shares, and the is $85 (which equals the price of an Echo share on the purchase date). The option expires on July 31, 2019. The following data are available with respect to the put option.

Market Price of Echo Shares Time $80 per share 82 per share Value of Put Option Date March 31, 2019 June 30, 2019 $200 9

Instructions
Prepare the journal entries for Warren for the following dates.
a. January 7, 2019-Investment in put option on Echo shares.
b. March 31, 2019-Warren prepares financial statements.
c. June 30, 2019-Warren prepares financial statements.
d. July 6, 2019-Warren settles the put option on the Echo shares.

Strike Price
In finance, the strike price of an option is the fixed price at which the owner of the option can buy, or sell, the underlying security or commodity.