Dora Company Declared and Distributed a 10% Stock Dividend on 20,000

Multiple Choice

Dora Company declared and distributed a 10% stock dividend on 20,000 shares of issued and outstanding $5 par value common stock.The market price per share was $9 on the declaration date.Which of the following correctly describes the effect of accounting for the declaration and distribution of the stock dividend?

A) Retained earnings decreased $10,000.
B) Additional paid-in capital increased $8,000.
C) Common stock increased $1,000.
D) Retained earnings decreased $8,000.