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*E17-26B (Call Option) On July 10, 2014. Outback Co. invested idle cash by purchasing a call option on Toby Inc. common shares for $700. The notional value of the call option is 700 shares, and the option price is $31. (Market price of an Outback share is

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*E17-26B (Call Option) On July 10, 2014. Outback Co. invested idle cash by purchasing a call option on;Toby Inc. common shares for $700. The notional value of the call option is 700 shares, and the option price;is $31. (Market price of an Outback share is $31.) The option expires on February 12, 2015. The following;data are available with respect to the call option.;Market Price of Toby Time Value of Call;Date Shares Option;September 30, 2014 $32 per share $410;December 31, 2014 $35 per share 50;January 31, 2015 $34 per share 20;Instructions;Prepare the journal entries for Outback for the following dates.;(a) Investment in call option on Toby shares on July 10, 2014.;(b) September 30, 2014?Outback prepares financial statements.;(c) December 31, 2014?Outback prepares financial statements.;(d) January 31, 2015?Outback settles the call option on the Toby shares.

 

Paper#78443 | Written in 18-Jul-2015

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