Levis, a U.S. Co., has several transactions with foreign entities. On November 12, 2019, Levis purchased goods from a German Company at a price of 40,000 Euros, when the direct exchange rate was 1 Euro = $1.35. The account has not been settled as of December 31, 2019, when the exchange rate was 1 Euro = $1.38. Assume that the transaction is denominated in the foreign currency units.

Select one:

a. Levis should recognize a foreign currency transaction loss in the amount of $1,200, as the Dollar is strengthened against the Pound and the year-end balance of accounts payable is 55,200.

b. Levis should recognize a foreign currency transaction gain in the amount of $1,200, as the Dollar is weakened against the Pound and the year-end balance of accounts payable is 52,800.

c. Levis should recognize a foreign currency transaction gain in the amount of $1,200, as the Dollar is strengthened against the Pound and the year-end balance of accounts payable is 52,800.

d. Levis should recognize a foreign currency transaction loss in the amount of $1,200, as the Dollar is weakened against the Pound and the year-end balance of accounts payable is 55,200.