Question

On August 15, 2016, Grouper Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $378. The notional value of the call option is 420 shares, and the option price is $42. The option expires on January 31, 2017, The following data are available with respect to the call option Market Price of Counting Crows Shares Time Value of Call Option Date September 30, 2016 December 31, 2016 January 15, 2017 $50 per share $48 per share 549 per share $189 68 32 Prepare the journal entries for Grouper for the following dates (a) (b) (c) (d) Investment in call option on Counting Crows shares on August 15, 2016 September 30, 2016- Grouper prepares financial statements. December 31, 2016-Grouper prepares financial statements January 15, 2017-Grouper settles the call option on the Counting Crows shares. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Date Account Titles and Explanation Debit Credit To record the change in intrinsic value.) To record the time value change.) To record the change in intrinsic value.) To record the time value change.) To record the time value change.) To record settlement of call option.)

Answer 1