Atkins Company had 21,700 shares of $5 par value common stock outstanding prior to declaring a 10% common stock dividend. The market value of the common stock on the declaration date was $11. Which of the following statements correctly describes the effect of the common stock dividend?

Retained earnings decreased $23,870.

Retained earnings decreased $10,850.

Total stockholders' equity decreased $23,870.

Total stockholders' equity decreased $10,850.