How will the declaration and distribution of a 10 percent stock dividend affect the issuing corporation's balance of retained earnings and total stockholders' equity,respectively?

Question

Quizplus · Accepted Answer

A stock dividend decreases retained earnings because it is a distribution of earnings to shareholders. However, it does not affect total stockholders' equity because it is a reclassification within equity, moving amounts from retained earnings to common stock and additional paid-in capital.

How Will the Declaration and Distribution of a 10 Percent