s of December 31, 2016, Warner Corporation reported the following:

Dividends payable	$32,000
Treasury stock	720,000
Paid-in capital - share repurchase	32,000
Other paid-in capital accounts	5,200,000
Retained earnings	$4,200,000

During 2017, half of the treasury stock was resold for $264,000; net income was $720,000; cash dividends declared were $1,620,000; and stock dividends declared were $620,000.

The 2017 sale of half of the treasury stock would:

Reduce retained earnings by $64,000

Reduce retained earnings by $96,000

Increase total shareholders' equity by $360,000

Reduce income before tax by $96,000