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Refer To p16 1 But Assume That Hing Wa Wrote Sold PDF
Refer To p16 1 But Assume That Hing Wa Wrote Sold PDF
Refer to P16-1, but assume that Hing Wa wrote (sold) the call option for a premium of $480
(instead of buying it). Assume that the market price of the shares and the fair value of the option
are otherwise the same.
In P16-1
The treasurer of Hing Wa Corp. has read on the Internet that the stock price of Ewing Inc. is
about to take off. In order to profit from this potential development, Hing Wa purchased a call
option on Ewing common shares on July 7, 2017 for $480. The call option is for 240 shares
(notional value), and the strike price is $80. The option expires on January 31, 2018. The
following data are available with respect to the call option:
Instructions
Prepare the journal entries for Hing Wa for the following dates:
(d) January 4, 2018: Hing Wa settles the call option net on the Ewing shares (that is, without
selling the shares).
ANSWER
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