A firm has retained earnings of $11 million, a common shares account of $2 million, an 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?
Additional paid-in-capital = $5,400,000 Retained earnings = $5,100,000; Common shares = $3,300,000; 

Additional paid-in-capital = $6,600,000 Retained earnings = $5,100,000; Common shares = $2,700,000; 

Additional paid-in-capital will increase by $300,000.

Additional paid-in-capital = $5,400,000 Retained earnings = $900,000; Common shares = $300,000;