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Aylmer Inc paid $230 for a call to purchase 800 shares of Belmont Inc on April 1, Y3. The strike price was $28.50 per share and could be exercised anytime in the next 6 months. On April 1, Y3, the market price for one share of Belmont Inc. was $29.30. Belmont's stock price rose. On June 30, Y3, the price for Belmont stock was $36.10 per share. The fair value of the option on June 30, Y3 was $8,340. REQUIRED Prepare the appropriate entries under two different scenarios: 1) Aylmer exercised the option 2) Aylmer did not exercise the option (just the June 30th entry)

Aylmer Inc paid $230 for a call to purchase 800 shares of Belmont Inc on April 1, Y3. The strike price was $28.50 per share and could be exercised anytime in the next 6 months. On April 1, Y3, the market price for one share of Belmont Inc. was $29.30. Belmont's stock price rose. On June 30, Y3, the price for Belmont stock was $36.10 per share. The fair value of the option on June 30, Y3 was $8,340. REQUIRED Prepare the appropriate entries under two different scenarios: 1) Aylmer exercised the option 2) Aylmer did not exercise the option (just the June 30th entry)

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter15: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 28E
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Aylmer Inc paid $230 for a call to purchase 800 shares of Belmont Inc on April 1, Y3. The strike price was $28.50 per share and could be exercised anytime in the next 6 months. On April 1, Y3, the market price for one share of Belmont Inc. was $29.30. Belmont's stock price rose. On June 30, Y3, the price for Belmont stock was $36.10 per share. The fair value of the option on June 30, Y3 was $8,340. REQUIRED Prepare the appropriate entries under two different scenarios: 1) Aylmer exercised the option 2) Aylmer did not exercise the option (just the June 30th entry)
Transcribed Image Text:Aylmer Inc paid $230 for a call to purchase 800 shares of Belmont Inc on April 1, Y3. The strike price was $28.50 per share and could be exercised anytime in the next 6 months. On April 1, Y3, the market price for one share of Belmont Inc. was $29.30. Belmont's stock price rose. On June 30, Y3, the price for Belmont stock was $36.10 per share. The fair value of the option on June 30, Y3 was $8,340. REQUIRED Prepare the appropriate entries under two different scenarios: 1) Aylmer exercised the option 2) Aylmer did not exercise the option (just the June 30th entry)
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