On December 10, 2010, Smitty Corporation reacquired2,000 shares of its own $5 par value common stock at a priceof $60 per share. In 2011, 500 of the treasury shares arereissued at a price of $70 per share. Which of the followingstatements is correct?a. The treasury stock purchased is recorded at cost and isshown in Smitty’s December 31, 2010, balance sheet asan asset. b. The two treasury stock transactions result in an over-all net reduction in Smitty’s stockholders’ equity of $85,000. c. Smitty recognizes a gain of $10 per share on the reissu-ance of the 500 treasury shares in 2011. d. Smitty’s stockholders’ equity was increased by$110,000 when the treasury stock was acquired.

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