On November 2, 2006, Finsbury, Inc. issued warrants to its stockholders giving them the right to purchase additional $20 par value common shares at a price of $30. The stockholders exercised all warrants on March 1, 2007. The shares had market prices of $33, $35, and $40 on November 2, 2006; December 31, 2006; and March 1, 2007, respectively. What were the effects of the warrants on Finsbury’s additional paid-in capital and net income?
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Additional paid-in capital |
Net income |
|
|
a. |
Increased in 2007 |
No effect |
|
b. |
Increased in 2006 |
No effect |
|
c. |
Increased in 2007 |
Decreased in 2006 and 2007 |
|
d. |
Increased in 2006 |
Decreased in 2006 and 2007 |