Zealot Inc. has retained earnings of $500,000 and total stockholders’ equity of $2,000,000. It has 100,000 shares of $8 par value common stock outstanding, which is currently selling for $30 per share. If Zealot declares a 10% stock dividend on its common stock:

(a) net income will decrease by $80,000.

(b) retained earnings will decrease by $80,000 and total stockholders’ equity will increase by $80,000.

(c) retained earnings will decrease by $300,000 and total stockholders’ equity will increase by $300,000.

(d) retained earnings will decrease by $300,000 and total paid-in capital will increase by $300,000.

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