Question - Your answer is partially correct. Try again. On August 15, 2016, Ayayai Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $648. The notional value of the call option is 720 shares, and the option price is $72. The option expires on January 31, 2017. The following data are available with respect to the call option.
Date Market Price of Counting Crows Shares Time Value of Call
Option
September 30, 2016 $86 per share $324
December 31, 2016 $83 per share 117
January 15, 2017 $85 per share 54
Prepare the journal entries for Ayayai for the following dates.
(a) Investment in call option on Counting Crows shares on August 15, 2016.
(b) September 30, 2016-Ayayai prepares financial statements
(c) December 31, 2016-Ayayai prepares financial statements.
(d) January 15, 2017-Ayayai settles the call option on the Counting Crows shares.