Welch Company Purchased a Put Option on Reese Common Shares

question 80

Essay

Welch Company purchased a put option on Reese common shares on July 7, 2015, for $215. The put option is for 300 shares, and the strike price is $51. The option expires on July 31, 2015. The following data are available with respect to the put option:
InstructionsPrepare the journal entries for Welch Company for the following dates:
(a) January 7, 2015-Investment in put option on Reese shares.
(b) March 31, 2015- Welch prepares financial statements.
(c) June 30, 2015- Welch prepares financial statements.(d) July 6, 2015- Welch settles the put option on the Reese shares.

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Definitions:

Consistent

Referring to the characteristic of being steady, reliable, and uniform over time.

Over Time

This term refers to the concept of a duration or period extending beyond the usual or expected time, often used in contexts ranging from work hours to the study of change.

Behavioral Economics

The subfield of economics that integrates the insights of psychology

Inconsistent

Lacking compatibility or uniformity, or displaying variance and contradiction within a stated set of facts or values.