On February 13, Solo Inc. reacquires 50,000 shares of its $1 par value common stock at the current market price of $11. The stock was originally issued for $8. On August 22, Solo reissued the stock for $14. What is the effect of the February 13 transaction on Solos financial statements?

Assets decrease and equity decreases by $150,000

Assets decrease and equity decreases by $550,000

Assets decrease and equity increases by $150,000

None of these

Assets decrease and equity increases by $550,000