A company grants its executives stock options as a form of compensation. The company correctly determines the fair value of the options. During the service period (the expected period of benefit for the company), the company records the complete journal entry related to compensation expense.How does this annual journal entry affect Total Equity and Retained Earnings, respectively?

Select one:

a.

No Effect, Increase

b.

No Effect, Decrease

c.

Decrease, Increase

d.

Decrease, Decrease

e.

Decrease, No Effect