1. On January 31, Country Bank had 750,000 shares of $3 par value common stock outstanding. On that date, the company declared a 10% stock dividend when the market price of the stock was $86 per share. The immediate effect of this dividend upon Country Bank was:

A. A reduction in retained earnings of $6,450,000.

B. A liability to stock holders f $225,000.

C. A reduction in retained earnings of $225,000.

D. A reduction in cash of $6,225,000.

2. Bonds payable are a means of dividing a very large, long term liability among creditors, some of whom may participate in the loan only for a short period of time

True or false?