Land Inc Has Retained Earnings of $800,000 and Total Stockholders' Equity

Multiple Choice

Land Inc. has retained earnings of $800,000 and total stockholders' equity of $2,000,000. It has 300,000 shares of $5 par value common stock outstanding, which is currently selling for $30 per share. If Land declares a 10% stock dividend on its common stock:

A) net income will decrease by $150,000.
B) retained earnings will decrease by $150,000 and total stockholders' equity will increase by $150,000.
C) retained earnings will decrease by $900,000 and total stockholders' equity will increase by $900,000.
D) retained earnings will decrease by $900,000 and total paid-in capital will increase by $900,000.