Ludwick Inc

Multiple Choice

Ludwick Inc.has retained earnings of $800,000 and total equity of $2,000,000.It has 200,000 ordinary shares with a $5 par value outstanding, which is currently selling for $30 per share.If Ludwick declares a 10% share dividend on its ordinary shares:

A) net income will decrease by $100,000.
B) retained earnings will decrease by $100,000 and total equity will increase by $100,000.
C) retained earnings will decrease by $600,000 and total equity will increase by $600,000.
D) retained earnings will decrease by $600,000 and share capital and share premium will increase by $600,000.