Accounting submission

timer Asked: Oct 18th, 2018
account_balance_wallet $30

Question Description

Assignment Details

Globalization is a continuous process whereby managers become aware of the impact of international activities on their companies. This process takes place in stages that include exporting, licensing joint ventures, wholly owned subsidiaries, and global sourcing. Each stage has implications for the type of accounting information reported.

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 .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 .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 .87 U.S. dollars per Canadian dollar.

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

Please submit your assignment.

Tutor Answer

School: Purdue University


Running head: ACCOUNTING


Institution affiliation:


Journal entries

Dec 11

Dec. 31

Feb 9

General Journal
Accounts Payable Capable Trappers, Ltd
To record purchase of furs from capable Trappers Ltd.
For 25000 Canadian dollars when the exchange rate is
0.85 U.S. dollars per Canadian dollar
Loss on fluctuations in foreign exchange rates
Accounts payable capable Trappers
To adjust balance of 25,000 Canadian dollars Account
Payable to amount indicated by year-end exchange rate:
Original account balance 21,250
Adjusted balance ($25,000*0.89)= 22250
Required adjustment (loss) (1000)
Accounts Payable, Capable Trappers
Gain on fluctuations in foreign exchange rate
To record payment of 25000 Canadian dollars account o
Capable Trappers, Ltd and to recognize gain from fall in
Exchange rate since Dec 31:
Accounts Payable, adjusted balance $22,250
Amount paid, Feb. 9
Gain from decline in exchange rate $500




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