Question

Pathfinder Co. acquires a call option on 10,000 currency units at a strike price of 500...

Pathfinder Co. acquires a call option on 10,000 currency units at a strike price of 500 for 20,000 on April 1, 20x1. The call option is exercisable on July 1, 20x1. Movements in prices are shown below:

April 1, 20x1 June 30, 20x1
Spot Prices 500 600
Time value of option 20,000 5,000

Requirements: Provide the Journal entries ( assume net settlement of the contract)

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