What Effect Does a Stock Dividend Have on the Financial

What effect does a stock dividend have on the financial statements of the company that pays the dividend?

A) The current market value of the stock "paid" as the dividend must be transferred from the Retained earnings account to the Common stock account and the Additional paid-in capital account.
B) The par value of the stock"paid" as the dividend must be transferred from the Retained earnings account to the Common stock account and the Additional paid-in capital account.
C) No entry is made on the financial statements, because stock dividends do not affect the firm's market value.
D) The retained earnings account will increase and the balance in the Cash account will decrease by the market value of the stock "paid" as the dividend.
E) The amount in the Common stock account will increase, but the number of common shares outstanding will not change.