A company purchased treasury stock for $19,800. The treasury stock was initially issued for $14,000 and had a $5,800 par value.

A company purchased treasury stock for $19,800. The treasury stock was initially issued for $14,000 and had a $5,800 par value. Which of the following statements correctly describes the effects of the treasury stock purchase?

Net income increases by $8,200.

Net income decreases by $8,200.

Stockholders' equity increases $14,000.

Stockholders' equity decreases $19,800.