Homework Answers
Answer -
a) Answer -
Investment in call option on Wade shares
| Date | Account title | Debit | Credit |
| Jul. 7, 2017 | Call option | $240 | |
| Cash | $240 |
b) Answer -
Miller prepares financial statements
| Date | Account title | Debit | Credit |
| Sep. 30, 2017 | Call option [($77 - $70) * 200 shares] | $1400 | |
| Unrealized holding gain or loss-Income | $1400 | ||
| Sep. 30, 2017 | Unrealized holding gain or loss-Income | $60 | |
| Call option ($240 - $180) | $60 |
c) Answer -
Miller prepares financial statements
| Date | Account title | Debit | Credit |
| Dec. 31, 2017 | Unrealized holding gain or loss-Income | $400 | |
| Call option [($75 - $77) * 200 shares] | $400 | ||
| Dec. 31, 2017 | Unrealized holding gain or loss-Income | $115 | |
| Call option ($180 - $65) | $115 |
d) Answer -
Miller settles the call option on the Wade shares
| Date | Account title | Debit | Credit |
| Jan. 4, 2018 | Call option [($76 - $75) * 200 shares] | $200 | |
| Unrealized holding gain or loss-Income | $200 | ||
| Jan. 4, 2018 | Unrealized holding gain or loss-Income | $35 | |
| Call option ($65 - $30) | $35 | ||
| Jan. 4, 2018 | Cash ($6 * 200 shares) | $1200 | |
| Loss on settlement of call option | $30 | ||
| Call option | $1230 |
| Call option | |
| $240 | |
| $1400 | $60 |
| $200 | $400 |
| $115 | |
| $35 | |
| $1230 | |
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Derivatives:
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Derivatives:
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