Dunavant Service Company views share repurchases as treasury stock. Dunavant purchased shares and then later sold the shares at more than their acquisition price. What is the effect of the sale of the treasury stock on each of the following?
A) Retained earnings: increase; Paid-in capital: increase
B) Retained earnings: increase; Paid-in capital: no effect
C) Retained earnings: no effect; Paid-in capital: no effect
D) Retained earnings: no effect; Paid-in capital: increase
Answer: D
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