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On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $432.

On August 15, 2016, Splish Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $432. The notional value of the call option is 480 shares, and the option price is $48. The option expires on January 31, 2017. The following data are available with respect to the call option.


Date Market Price of Counting Time Value of Call

Crows Shares Option


September 30, 2016 $58 per share $216


December 31, 2016 $55 per share 78


January 15, 2017 $56 per share 36



Prepare the journal entries for Splish for the following dates.


(a)Investment in call option on Counting Crows shares on August 15, 2016.


(b)September 30, 2016—Splish prepares financial statements.


(c)December 31, 2016—Splish prepares financial statements.


(d)January 15, 2017—Splish settles the call option on the Counting Crows shares.







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