User Account

All Pages

Prepare the journal entry to record the purchase

Assignment Help Accounting Basics
Reference no: EM131116269

1. Derivative Transaction On January 2, 2010, Jones Company purchases a call option for $300 on Merchant common stock. The call option gives Jones the option to buy 1,000 shares of Merchant at a strike price of $50 per share. The market price of a Merchant share is $50 on January 2, 2010 (the intrinsic value is therefore $0). On March 31, 2010, the market price for Merchant stock is $53 per share, and the time value of the option is $200.

(a) Prepare the journal entry to record the purchase of the call option on January 2, 2010.

(b) Prepare the journal entry (ies) to recognize the change in the fair value of the call option as of March 31, 2010.

(c) What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2010? (Ignore tax effects.) 

Reference no: EM131116269

Questions Cloud

Prepare contribution margins with all revisions included : Prepare contribution margins as in part (1) with all revisions included. For the original estimates, compute each of the following: a. Break-even point for the given sales mix. b. Margin of safety for the estimated sales volume.
Calculate the vapour pressure : A) Calculate the vapour pressure of a 5% by mass benzoic acid [C7H6O2(aq)] in ethanol solution at 35oC. The vapour pressure of pure ethanol at this temperature is 13.40 kPa. Present your answer in kPa.
Photochemical destruction of stratospheric ozone : In the mid 1990's a famous conservative pundit claimed that since chlorofluorocarbons are more dense than air, it is not possible for them to be present at high atmospheric elevations (in the ozone layer). Thus, they cannot play a role in the all..
Differences in boiling point of a five carbon alkene : Explain the differences in boiling point of a five carbon alkene, alkyl bromide, and alcohol. What intermolecular forces are involved in holding the molecules in the liquid form?
Prepare the journal entry to record the purchase : What was the effect on net income of entering into the derivative transaction for the period January 2 to March 31, 2010? (Ignore tax effects.)
People are carrying too much weight : 1. Fat has a lot of kcal, and many people are carrying too much weight. Should humans consume fat? If so, what kind (be specific, using the names [not just types] of the fatty acids) and why.
Evaluate different aspects of organizational change : All sources used must be referenced; paraphrased and quoted material must have accompanying citations in APA format.
What steps would take to investigate suspected embezzlement : What steps would you take to investigate this suspected embezzlement? As a first step in your investigation, would you interview Jane about the problem? Why or why not? How would you conduct Jane's admission-seeking interview in order to be most effe..
Find the average of the molar mass : we have to calculate this for both trials as well as molar mass of acid if monoprotic also for both trials and then the last question we need to find the average of the molar mass.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Market positioning and advertising

CITGO, the petroleum company owned by the Venezuelan government, sells its products throughout the world. Do you anticipate that its market positioning and advertising differ in different countries? Why or why not?

  Calculate the gross lease payment receivable to be recorded

Lampley, Inc. enters into a direct finance lease agreement as lessor on January 1, 2001, to lease an airplane to National Airlines. The term of the noncancelable lease is eight years and payments are required at the end of each year.

  On december 31 2013 russell co estimated that 4 of its net

on december 31 2013 russell co. estimated that 4 of its net sales of 410600 will become uncollectible. the company

  Graymont industries purchases solvate a chemical compound

graymont industries purchases solvate a chemical compound used in several of its products from chemmaster. chemmaster

  The charter of a corporation provides for the issuance of

the charter of a corporation provides for the issuance of 100000 shares of common stock. assume that 45000 shares were

  Watch corporation of switzerland claims that its watches on

watch corporation of switzerland claims that its watches on average will neither gain nor lose time during a week. a

  Jamir company has a contribution margin ratio of 35 if

jamir company has a contribution margin ratio of 35. if jamir has 335405 in fixed costs what amount of sales will need

  This problem comes from managerial accounting a focus on

this problem comes from managerial accounting a focus on ethical decision making 5th edition jackson sawyer and

  Find out the difference between managerial and financial

1. determine the difference between managerial and financial accounting and their interrelationship.2. analyze the

  Xtreme sports has 150000 of 8 noncumulative

xtreme sports has 150000 of 8 noncumulative nonparticipating preferred stock outstanding. xtreme sports also has 550000

  Us pump is multidivisional firm tha manufactures and

u.s. pump is multidivisional firm tha manufactures and installs chemical piping and pump systmes. the valve division

  Reasonable amount of time to other duties

31.1 Mr. Smith's activities at the time of the incident are related to his employment. Under the contacts it is stated that he "may be required to devote a reasonable amount of time to other duties." The math club, an organization within the schoo..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd