(Derivative Financial Instrument) Johnstone Co. purchased a put option on Ewing common shares on July 7, 2017, for $240. The put option is for 200 shares, and the strike price is $70. (The market price of a share of Ewing stock on that date is $70.) The option expires on January 31, 2018. The following data are available with respect to the put option. Date Market Price of Ewing Shares Time Value of Put Option September 30, 2017 $77 per share $125 December 31, 2017 75 per share 50 January 31, 2018 78 per share 0 InstructionsPrepare the journal entries for Johnstone Co. for the following dates.(a) July 7, 2017—Investment in put option on Ewing shares.(b) September 30, 2017—Johnstone prepares financial statements.(c) December 31, 2017—Johnstone prepares financial statements.(d) January 31, 2018—Put option expires.

On January 1, 2026, Baker Company purchased, as an investment, 5% bonds, having a maturity value of $150,000, for $138,400. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2026, and mature January 1, 2036, with interest receivable June 30 and December 31 of each year. The securities are classified as available-for-sale. January 1, 2026 June 30, 2026 December 31, 2026 June 30, 2027 December 31, 2027 June 30, 2028 December 31, 2028 Schedule of Interest Revenue and Bond Amortization Amortization Cash Received (2.5%) Interest Revenue (3.5%) 3,750 3,750 3,750 3,750 3,750 3,750 4,844 4,882 4,922 4,963 5,005 5,049 The fair value of the bonds at December 31 of each year-end is as follows. 2026 145,000 2027 148,000 2028 152,000 1,094 1,132 1,172 1,213 1,255 1,299 Carrying Value 138,400 139,494 140,626 141,798 143,011 144,266 145,565 a) Prepare the journal entry at the date of the investment purchase. b) Prepare the journal entries to record the interest received on…

On December 31, 2015, Martin Corp invested in Marlin’s 5-year, $200,000 bond with a 5% interest rate for $191,575. The bond pays semiannual interest on June 30th and December 31st.  The fair values of the bonds at the end of 2016~2018 are $194,500, $194,200, and $195,750.  Martin sold its investment in Marlin’s bond on July 1, 2019 at 98 ½ (i.e. selling price is = 98.5% of the face value).  Assuming the bonds are classified as Trading investment, prepare the journal entries on aforementioned dates.

On January 1, 2019, Roosevelt Company purchased 12% bonds having a maturity value of $600,000 for $637,907.40. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2019, and mature January 1, 2024, with interest received December 31 of each year. Assume that Roosevelt elected the fair value option for this held-for-collection investment. Instructions (a). Prepare any entries necessary at December 31, 2019, assuming the fair value of the bonds is $640,000. (b). Prepare any entries necessary at December 31, 2020, assuming the fair value of the bonds is $625,000.