On August 31, 2021, Lyon Ltd. had 50,000, no-par value common shares issued and outstanding. All 50,000 shares were issued at $4 per share. The balance in retained earnings on August 31, 2021 was $60,000. On September 1, 2021, 5,000 common shares were repurchased at $3 per share and cancelled. The impact of this transaction resulted in:

Question 9 options:

A decrease in contributed surplus of $5,000

A decrease in retained earnings of $5,000

An increase in contributed surplus of $5,000

An increase in retained earnings of $5,000