C. The treasurer of Miller Co. has read on the Internet that the price of Wade...

C. The treasurer of Miller Co. has read on the Internet that the price of Wade Inc. ordinary shares is about to take off. In order to profit from this potential development, Miller purchased a call option on Wade shares on July 7, 2019, for €240. The call option is for 200 shares (notional value), and the strike price is €70. (The market price of a Wade share on that date is €70.) The option expires on January 31, 2020. The following data are available with respect to the call option.

-------Date ---------------Market Price of Wade Shares ---------------Time Value of Call Option

September 30, 2019 ----------€65 per share ----------------------------------------€180

December 31, 2019 ------------68 per share -------------------------------------------80

January 4, 2020 ----------------72 per share -------------------------------------------60

Required:

Prepare the journal entries for Miller Co. on the following dates:

(a) July 7, 2019—Investment in call option on Wade shares.

(b) September 30, 2019—Miller prepares financial statements.

(c) December 31, 2019—Miller prepares financial statements.

(d) January 4, 2020—Miller settles the call option on Wade shares.

Expert Solution

ekkarill92 answered 2 years ago

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