Corine Ltd,a Trader Bought a December Put Option for 10

question 23

Multiple Choice

Corine Ltd,a trader bought a December put option for 10 $100 000 10% treasury bonds at a premium of $3.95 on January 1,2010.Year end for Corine is 30 June when the price for a December put option for $100 000 10% treasury bonds is $3.50.
What would be the journal entry for 30 June 2010?

• A)
• \(\begin{array}{llr}
• \text { Dr Loss on options contract } &\$4500\\
• \text { \( \mathrm{Cr} \) Investment in options contract } &&\$4500\\
• \end{array}\)
• B)
• \(\begin{array}{llr}
• \text { Dr Loss on options contract } &\$450\\
• \text { \( \mathrm{Cr} \) Investment in options contract } &&\$450\\
• \end{array}\)
• C)
• \(\begin{array}{llr}
• \text { Dr Investmentin options contract} &\$4500\\
• \text {Cr Gain on options contract } &&\$4500\\
• \end{array}\)
• D)
• \(\begin{array}{llr}
• \text { Dr Investmentin options contract} &\$450\\
• \text {Cr Gain on options contract } &&\$450\\
• \end{array}\)

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