Exercise 17-27On August 15, 2016, Teal Co. invested idle cash by purchasing a call option on Counting Crows Inc. common shares for $486. The notional value of the call option is 540 shares, and the option price is $54. The option expires on January 31, 2017. The following data are available with respect to the call option.DateMarket Price of CountingCrows SharesTime Value of CallOptionSeptember 30, 2016$65 per share$243December 31, 2016$62 per share88January 15, 2017$63 per share41Prepare the journal entries for Teal for the following dates.(a)Investment in call option on Counting Crows shares on August 15, 2016.(b)September 30, 2016—Teal prepares financial statements.(c)December 31, 2016—Teal prepares financial statements.(d)January 15, 2017—Teal settles the call option on the Counting Crows shares.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts.)No.DateAccount Titles and ExplanationDebitCredit(a)Aug. 15, 2016Sep. 30, 2016Dec. 31, 2016Jan. 15, 2017(b)Aug. 15, 2016Sep. 30, 2016Dec. 31, 2016Jan. 15, 2017(To record the change in intrinsic value.)(To record the time value change.)(c)Aug. 15, 2016Sep. 30, 2016Dec. 31, 2016Jan. 15, 2017(To record the change in intrinsic value.)(To record the time value change.)(d)Aug. 15, 2016Sep. 30, 2016Dec. 31, 2016Jan. 15, 2017(To record the time value change.)(To record settlement of call option.)Click if you would like to Show Work for this question:Open Show Work
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