Reference no: EM132952871
Flint Co. purchased a put option on Echo common shares on January 7, 2020, for $378. The put option is for 370 shares, and the strike price is $86 (which equals the price of an Echo share on the purchase date). The option expires on July 31, 2020. The following data are available with respect to the put option.
Date Market Price of Echo Shares Time Value of Put Option
March 31, 2020 $80 per share $182
June 30, 2020 82 per share 86
July 6, 2020 77 per share 24
Problem 1: Prepare the journal entries for Flint Co. for the following dates.
(a) January 7, 2020-Investment in put option on Echo shares.
(b) March 31, 2020-Flint prepares financial statements.
(c) June 30, 2020-Flint prepares financial statements.
(d) July 6, 2020-Flint settles the put option on the Echo shares.
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