On October 1, 2018, Chief Corporation declared and issued a 10% stock dividend. Before this date, Chief had 80,000 shares of $5 par common stock outstanding. The market value of Chief Corporation on the date of declaration was $10 per share. As a result of this dividend, Chief's retained earnings will:
A) Decrease by $80,000.
B) Not change.
C) Decrease by $40,000.
D) Increase by $80,000.

Question

Quizplus · Accepted Answer

$\begin{array}{|l|l|l|}
\hline \text { Retained earnings }(8,000 \text { shares } \times \$ 10 / \text { share }) & 80,000 & \
\hline \text { Common stock }(8,000 \text { shares } \times \$ 5 / \text { share }) & & 40,000 \
\hline \text { Paid-in capital\_excess of par } & & 40,000\\hline
\end{array}$

On October 1, 2018, Chief Corporation Declared and Issued a 10