A company with 100,000 authorized shares of $4 par common stock issued 50,000 shares at $9. Subsequently, the company declared a 2% stock dividend on a date when the market price was $10 per share. The effect of the declaration and issuance of the stock dividend is to

a.increase retained earnings, decrease common stock, and decrease paid-in capital

b.decrease retained earnings, increase common stock, and decrease paid-in capital

c.decrease retained earnings, increase common stock, and increase paid-in capital

d.increase retained earnings, decrease common stock, and increase paid-in capital