Can someone please explain in detail how to get the correct answer for this question? I really don't understand the problems where it says "declares a 20% dividend". I just don't understand what the 20% dividend means and how to calculate it.

Reynolds Corp. has 100,000 shares of $1 par value common stock issued and outstanding. Reynolds declares a 20% stock dividend when the fair value of the stock is $8 per share. The debit to retained earnings for the stock dividend is O $20,000. O $140,000. O $10,000. O $160,000