On January 1, 2017 ewing inc declared a 10% stock dividend on its common stock when the market value of the common stock was 20 per share. The stockholder`s equity before the stock dividend was declared consisted of:

Common Stock $10 par value authorized 200,000 shares:

Issued and outstanding 120,000 shares 1,200,000

Issued and outstanding 120,000 shares

Additional paid-in capital on common stock 150,000

Retained Earnings 700,000

Total stockholder`s equity _____7,050,000_________

What is the effect on the retained earnings as a result of the above transactions?

A.120,000 decrease

B.240,000 decrease

C. 400,000 decrease

D. 200,000 decrease