Naples Corporation Issued Call Options on 20,000 Shares of VESPUS

question 3

Essay

Naples Corporation issued call options on 20,000 shares of VESPUS Inc. on October 21, 2019. These options give the holder the right to buy VESPUS shares at $35 per share until May 17, 2020. For issuing these options, Naples received $60,000. On December 31, 2020 (Naples's fiscal year-end), the options traded on the Montreal Exchange for $3.50 per option. On May 17, 2020, VESPUS's share price increased to $40 and the option holders exercised their options. Naples had no holdings of VESPUS shares.
Required:
For Naples Corporation, record the journal entries related to these call options.

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Definitions:

Variant of authority decisions

Different forms or approaches to making decisions based on established power or authority within an organization.

Vroom, Yetton, and Jago

A model of decision-making that focuses on leadership and outlines how leaders can evaluate the situation and determine the level of involvement from subordinates in the decision-making process.

Manager sharing the problem

A leadership approach where managers involve their team in problem-solving processes to encourage ownership and diverse input.

Organizational Culture

is a system of shared beliefs, values, norms, and practices that influences how members of an organization interact with each other and with stakeholders outside the organization.