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.REQUIREDPrepare the appropriate entries under two different scenarios:1) Aylmer exercised the option2) Aylmer did not exercise the option (just the June 30th entry)

A call option is a legal contract that provided the right to the option buyer of buying the…

Answered: Aylmer Inc paid $230 for a call to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Aylmer Inc paid $520 for a call to purchase 850 shares of Belmont Inc on April 1, Y3.The strike price was $26.50 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 $31.55 per share.The fair value of the option on June 30, Y3 was $7,365. REQUIRED Prepare the appropriate entries under two different scenarios:1) Aylmer exercised the option2) Aylmer did not exercise the option (just the June 30th entry)
Crane Ltd. offered to sell common shares on a subscription basis. Each subscription allowed for the purchase of 20 shares at a price of $52 per share. Terms of the subscription stated that subscribers were to pay 45% of the price as a down payment, with the remainder due in six months. On June 1, 2023, 180 subscriptions were sold. Six months later, on December 1, only 90 of the subscriptions were fully paid for. According to the subscription contract, the company would retain the down payment on any defaulted subscriptions. (a) Prepare the journal entries to record the above transactions. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit
In the financial year to June 30, 2021, HIFI Ltd issued options for 400,000 shares. During that perlod, the average fair value of one ordinary share was $32 while the evercise price for the shares under option was $26. The company commenced the financial year with 940,000 ordinary shares in issue, while profit for the year amounted to $921.000. REQUIRED: Calculate BEPS and DEPS for the year.
XYZ Corp. has announced that it will take four rights to buy a new share in the offering at a subscription price of $35. At the close of business, the day before the ex- rights day, the company's stock sells for $60 per share. The next morning, you notice that the stock sells for $53 per share and the rights sell for $6 each. Are the stock and/or the rights correctly priced on the ex-rights day? Describe a transaction in which you could use these prices to create an immediate profit.
-On June 1, 20x1, Eureka Co. issued 30,000 stock rights to its shareholders. Each stock right entitles the holder to purchase one ordinary share of Eureka Co. for P50. The par value per share is P10 and the fair value per share is P80. Half of the stock rights were exercised on June 20, 20x1 and the remaining half expired on June 30, 20xl. Requirement: Provide the journal entries.
Aylmer Inc paid $520 for a call to purchase 850 shares of Belmont Inc on April 1, Y3.The strike price was $26.50 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 $31.55 per share.The fair value of the option on June 30, Y3 was $7,365. 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)
The ABC Corporation received subscription for 9,000 ordinary shares at P40/share, where P35 is the par value and received 40% downpayment. A month after 3,600 of said shares were in full while the rest paid an additional P20/share. By the end of the year, 500 of said subscribers were not able to pay and were declared as delinquent. How much would be debited as Receivable from highest bidder?
Righty, Inc., entered into a stock subscription contract that called for the purchase by investors of 10,000 shares of $10 par common stock at a price of $43 per share. The contract required a down payment of $20 per share, with the remaining $23 per share collectible at the end of three months. Required: a. Prepare the journal entry to record the stock subscription and down payment. b. The subscribers paid the remainder at the end of three months. Prepare the journal entry(ies) to record the final payment and the issuance of the shares of stock.
On April 15, 2023, Rizzo Inc. purchased 34,500 shares of Hernandez, Inc. for $22 per share (passive interest). During the year Rizzo Inc. sold 4,500 shares of Hernandez, Inc. for $25 per share. Rizzo Inc. started operations on January 1, 2023. At December 31, 2023 the market price of Hernandez, Inc.’s stock was $19 per share. What is the total amount of unrealized gain (loss) that Rizzo Inc. will report through its income statement for the year ended December 31, 2023 related to its investment in Hernandez, Inc. stock?
On January 15, 2020 bieber co purchased 30,000 shares of Hand Co. at $35 per share, paying $10,000 in commissions to the broker of the deal. On March 17, 2020, Hand Co. paid a cash dividend of $2.50 per share. The fair value of the Hand Co. stock at the end of 2020 was $38 per share. During 2020, Hand Co. had net income of $3,000,000. Prepare the journal entries for Bieber Co. for the above transaction assuming the amount of shares purchased represents 40% of Hand Co. outstanding stock.
On February 3, Year 1, Teel Corporation enters into a subscription contract with several subscribers for 7,000 shares of $5 par common stock at a price of $15 per share. The contract requires a down payment of 25%, with the remaining balance to be paid on May 3, Year 1. The stock will be issued to each subscriber upon full payment. The May 3 receipt of the full remaining balance from subscribers. The market price is currently $16 per share
Warhol Company has 2,000 shares of $0.50 par value common shares authorized. On March 1, Warhol sold 1,550 shares for $10 per share. On May 1 of the same year, Warhol reacquired 550 of those shares for $11 each. Over the next several months, the market price of the shares increased and Warhol Company reissued 150 shares at $15 per shares. By December 1, the company reissued the remaining 400 shares. At that time, the market price of the shares had fallen to $9 per share. What is the entry the company would make on December 1st to record the reissue of 400 shares of treasury stock? Responses Cash 3,600 Capital in Excess of Cost - Treasury Stock 400 Retained Earnings 400 Treasury Stock 4,400 Cash…

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