Roman Corporation Issued Call Options on 5,000 Shares of POMPEI

question 24

Essay

Roman Corporation issued call options on 5,000 shares of POMPEI Inc.on October 21,2012.These options give the holder the right to buy POMPEI shares at $35 per share until May 17,2013.For issuing these options,Roman received $15,000.On December 31,2012 (Roman's fiscal year-end),the options traded on the Montreal Exchange for $3.50 per option.On May 17,2013,POMPEI's share price increased to $40 and the option holders exercised their options.Roman had no holdings of POMPEI shares.
Requirement:
For Roman Corporation,record the journal entries related to these call options.

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Definitions:

Closing Account

The process of preparing accounts for the end of an accounting period, involving transferring temporary account balances to permanent ones.

Long Term Strategic

Pertaining to long-range planning and actions aimed at achieving major goals or objectives.

Marketing Costs

Expenses related to promoting, selling, and distributing a product or service.

Design Costs

Expenses incurred during the planning and development phase of a product, including labor, materials, and overhead associated with creating the design.