Detailed Answer
(b) In the case of the receivable denominated in Japanese
yen, a foreign exchange transaction gain was recorded on
the collection of the receivable. This means that more yen was
received than was recorded in the receivable account. For that to
happen the rate of yen exchangeable for a dollar would have had
to decrease, requiring more yen to be paid at the settlement date
for the same amount of dollars at the contract date. On the other
hand, there was a foreign exchange transaction loss on the payable
denominated in euros. This means that at the settlement
date Shore Co. had to pay more euros than were recorded in the
payable account. For this to occur the rate of euros exchangeable
for a dollar would have had to decrease, requiring more euros to
be paid at the settlement date for the same amount of dollars at
the contract date.