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 on the declaration date was $9 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.