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 and was $10 on the distribution date. Which of the following correctly describes the accounting for the declaration and distribution of the stock dividend?

A) Retained earnings decreased $20,000.
B) Capital in excess of par increased $10,000.
C) Common stock increased $18,000.
D) Retained earnings decreased $18,000.