Hummel Company purchased a put option on Olney common shares on July 7, 2014, for $100. The put option is for 200 shares, and the strike price is $30. The option expires on January 31, 2015. The following data are available with respect to the put option:
InstructionsPrepare the journal entries for Hummel Company for the following dates:
(a) July 7, 2014-Investment in put option on Olney shares.
(b) September 30, 2014- Hummel prepares financial statements.
(c) December 31, 2014- Hummel prepares financial statements.(d) January 31, 2015-Put option expires.

Question

Hummel Company purchased a put option on Olney common shares on July 7, 2014, for $100. The put option is for 200 shares, and the strike price is $30. The option expires on January 31, 2015. The following data are available with respect to the put option:  
InstructionsPrepare the journal entries for Hummel Company for the following dates:
(a) July 7, 2014-Investment in put option on Olney shares.
(b) September 30, 2014- Hummel prepares financial statements.
(c) December 31, 2014- Hummel prepares financial statements.(d) January 31, 2015-Put option expires.

Quizplus · Accepted Answer

The Answer of Hummel Company purchased a put option on Olney common shares on July 7, 2014, for $100. The put option is for 200 shares, and the strike price is $30. The option expires on January 31, 2015. The following data are available with respect to the put option:  
InstructionsPrepare the journal entries for Hummel Company for the following dates:
(a) July 7, 2014-Investment in put option on Olney shares.
(b) September 30, 2014- Hummel prepares financial statements.
(c) December 31, 2014- Hummel prepares financial statements.(d) January 31, 2015-Put option expires.

Hummel Company Purchased a Put Option on Olney Common Shares