Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders equity of $1,200,000. It has 200,000 shares of $2 par value common stock outstanding which is currently selling for $5 per share. If Candela Company declares a 2-for-1 stock split on its common stock, which of the following will occur?

Total paid-in capital will increase by $1,000,000.

Retained earnings will decrease by $1,000,000.

There will be no effect on total common stockholders' equity.

Net income will increase by $1,000,000.