(Answered) Question - call option on august 15 2010 outkast co

Accounting

Question - Call Option: On August 15, 2010, Outkast Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $545. The notional value of the call option is 606 shares, and the option price is $61. (Market price of an Outkast share is $61.) The option expires on January 31, 2011. The following data are available with respect to the call option.

Date	Market Price of Counting Crows Shares	Time Value of Call Option
September 30, 2010	$73 per share	$273
December 31, 2010	$70 per share	98
January 15, 2011	$71 per share	45

Prepare the journal entries for Outkast for the following dates.

(a) Investment in call option on Counting Crows shares on August 15, 2010.

(b) September 30, 2010-Outkast prepares financial statements.

(d) January 15, 2011-Outkast settles the call option on the Counting Crows shares.

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