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What beta co entry to record the settlement is

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Problem 1: On July 4, 2019, Beta Co. bought call options for $ 4,800, giving them the "right" to buy 2,000 shares of Zion Co. for $ 20 per share. On August 17, 2019, when the option value is $24,000, Zion Co. settles the option for cash. Beta Co's entry to record the settlement is:

Option 1: Debit Cash - 24,000 // Credit Derivatives-Financial Assets/Liabilities - 4,800 // Credit Gain or Loss on Derivatives - $19,200

Option 2: Debit Cash - 24,000 // Credit Gain or Loss on Derivatives - $24,000

Option 3: Debit Cash or Loss on Derivatives - 24,000 // Credit Derivatives-Financial Assets/Liabilities - $24,000

Option 4: Debit Derivatives-Financial Assets/Liabilities - 4,800 // Debit Cash - 19,200 // Credit Gain or Loss on Derivatives - $24,000

Reference no: EM132823728

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