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Question
A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 per share. The effect of the declaration and issuance of the stock dividend is to
a. decrease retained earnings, increase common stock, and increase paid-in capital
b. increase retained earnings, decrease common stock, and decrease paid-in capital
c. increase retained earnings, decrease common stock, and increase paid-in capital
d. decrease retained earnings, increase common stock, and decrease paid-in capital
Answer
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