XY Company Had the Following Shareholder Equity: Common Shares Outstanding,10,000;

XY Company had the following shareholder equity: Common shares outstanding,10,000; average issue price,$115; current market price,$140.Shares sold on a stock subscription basis are not issued until the subscription price is collected in full.Recording a declaration of a 10 percent stock dividend in conformity with generally accepted accounting principles would change retained earnings:

A) On the basis of the market value of shares.
B) By 10 percent of its balance before the dividend.
C) On the basis of an arbitrary value of shares.
D) On the basis of the average paid-in value of shares.