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Question(s) / Instruction(s):

*Pr. 17-118—Free-standing derivative.
Yates Co. purchased a put option on Dixon common shares on July 7, 2007, for $215. The put option is for 300 shares, and the strike price is $51. The option expires on July 31, 2007. The following data are available with respect to the put option:




Market Price of Dixon Shares

Time Value of Put Option


March 31, 2007

$48 per share



June 30, 2007

$50 per share



July 6, 2007

$46 per share


*Pr. 17-118 (cont.)

Prepare the journal entries for Yates Co. for the following dates:
(a)     January 7, 2007—Investment in put option on Dixon shares.
(c)     March 31, 2007—Yates prepares financial statements.
(d)     June 30, 2007—Yates prepares financial statements.
(e)     July 6, 2007—Yates settles the call option on the Dixon shares.

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