. Explain ways in which Striking Furs can protect itself against the losses that would arise from a sudden increase in the foreign exchange rate.

. Explain ways in which Striking Furs can protect itself against the losses that would arise from a sudden increase in the foreign exchange rate.

Striking Furs imports furs from Canada. In the space provided below, prepare journal entries to record the following events.

Dec. 11, 2017: Purchased furs from Capable Trappers, Ltd., a Canadian corporation, at a price of 25,000 Canadian dollars, due in 60 days. The current exchange rate is $0.85 U.S. dollars per Canadian dollar. (Striking uses the perpetual inventory method; debit the Inventory account.)
Dec. 31, 2017: Striking made a year-end adjusting entry relating to the account payable to Capable Trappers. The exchange rate at year-end is $0.89 U.S. dollars per Canadian dollar.
Feb. 9, 2018: Issued a check for $21,750 (U.S. dollars) to National Bank in full settlement of the liability to Capable Trappers, Ltd. The exchange rate at this date is $0.87 U.S. dollars per Canadian dollar.

  1. Explain ways in which Striking Furs can protect itself against the losses that would arise from a sudden increase in the foreign exchange rate.

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