Assume Common Stock Is Issued to Employees as a Result

Multiple Choice

Assume common stock is issued to employees as a result of exercising stock purchase rights issued under a noncompensatory share purchase plan. Which of the following accurately describes the effect on the company's income, paid-in capital, and retained earnings, respectively?

A) decreased, increased, and decreased
B) no effect, increased, and increased
C) decreased, increased, and no effect
D) no effect, increased, and no effect