Dora Company Declared and Distributed a 10% Stock Dividend on 20,000

question 59

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. Which of the following correctly describes the effect of accounting for the declaration and distribution of the stock dividend?

• A)Retained earnings decreased $10,000.
• B)Additional paid-in capital increased $8,000.
• C)Common stock increased $1,000.
• D)Retained earnings decreased $18,000.

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