A company had beginning retained earnings of $60,000. During the year the company had net income of $20,000, and paid dividends of $7,500.

On the other hand, the company repurchased 1,000 shares of its stock for $45 during the period.

What is the effect of each of these transactions on the items shown below?

Select one:

a. decrease Retained earnings; decrease Total shareholders equity

b. increase Retained earnings; decrease Total shareholders equity

c. increase Retained earnings; increase Total shareholders equity

d. I dont know

e. decrease Retained earnings; increase Total shareholders equity