Lehman Ltd Has 50 000, 10 % Cumulative Preference Shares

Lehman Ltd has 50 000, 10 % cumulative preference shares fully paid to $2.00 which it wishes to replace with 50 000, 6 % cumulative preference shares fully paid to $2.00.It can do this provided it pays a penalty equal to 5% of the issued price of the preference shares.The penalty is by way of a special dividend.
-Lehman Ltd classifies these preference shares as equity.The penalty payment will be recognised in Lehman's financial statements as:

A) in the profit or loss statement as an expense of $2 500
B) in the profit or loss statement as an expense of $5 000
C) in the changes in equity statement as a reduction in retained profits of $2 500
D) in the changes in equity statement as a reduction in retained profit of $5 000