Atkins Company Had 20,000 Shares of $5 Par Value Common

Multiple Choice

Atkins Company had 20,000 shares of $5 par value common stock outstanding prior to a 10% common stock dividend declaration and distribution. The market value of the common stock on the declaration date was $11. Which of the following statements correctly describes the effect of the common stock dividend and declaration?

A) Retained earnings decreased $22,000.
B) Retained earnings decreased $10,000.
C) Total stockholders' equity decreased $22,000.
D) Total stockholders' equity decreased $10,000.