On 6/1/X2, an American Firm Purchased Inventory Costing 100,000 Canadian

Multiple Choice

On 6/1/X2, an American firm purchased inventory costing 100,000 Canadian Dollars from a Canadian firm to be paid for on 8/1/X2. Also on 6/1/X2, the American firm acquired an option for $1,500 to purchase 100,000 Canadian dollars for delivery on 8/1/X2. The strike price for the option was $0.685. The exchange rates were as follows: The entry to settle the option will include:

A) a credit to Investment in Option of $1,500
B) a debit to Foreign Currency of $73,000
C) a credit to cash of $73,000
D) a credit to Investment in Option of $2,000