A Firm Has Retained Earnings of $11 Million,a Common Shares

A firm has retained earnings of $11 million,a common shares account of $2 million,and additional paid-in-capital of $6 million,and the firm just paid a 5 percent stock dividend.Assume that fair market value is reflected in the relative size of both the common shares account and the additional paid-in-capital account.Which of the following statements is correct?

A) Retained earnings will increase by $400,000.
B) Common shares will increase by $266,667.
C) Additional paid-in-capital will increase by $300,000.
D) None of these statements are correct.