Treasury stock was acquired for cash at more than its par value, and then subsequently sold for an amount less than the acquisition price. There were no other Treasury Stock transactions in the history of the company. Assuming that the cost method of accounting for treasury stock transactions is used, what is the effect of the Purchase of Treasury Stock and the Sale of Treasury Stock, respectively, on Retained Earnings?

Select one:

a.

No Effect, No Effect

b.

No Effect, Increase

c.

Decrease, Increase

d.

No Effect, Decrease

e.

Decrease, No Effect