On July 5, 2020, Alpha Corp

question 48

Short Answer

On July 5, 2020, Alpha Corp. purchased a call option for $ 2,400, giving it the right to buy 2,000 shares of Omega Corp. for $ 20 per share. On August 18, 2020, when the option value is $ 12,000, Omega settles the option for cash. The entry on Alpha's books to record the settlement is

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Definitions:

Insurance Settlement

The agreement reached between the insurer and the insured to resolve a claim, resulting in payment to the insured or a third party.

Bits

The most basic data element in computer science, which can be a binary digit of 0 or 1.

Byte

A unit of digital information in computing and telecommunications that most commonly consists of eight bits, representing a single character of data.

Manufacturer

A company or individual that produces finished goods from raw materials on a large scale, using labor, machinery, and tools.