The Company issued all the outstanding shares for P 40 per share in 2020. On January 1, 2021, the Company reacquired and cancelled/retired the 20,000 shares at P 45 per shares. The Company reported the following shareholders equity on December 31, 2020: Share Capital with P 30 par value and 50,000 issued and outstanding shares amounting to P 1.5M, Share Premium amounting to 500,000 and Retained Earnings P 2M. What is the effect of cancellation of shares to contributed capital?

Group of answer choices

a. Decrease by 900,000

b. Increase by 800,000

c. Decrease by 800,000

d. Increase by 600,000