g. The stockholders equity of Gaffney Company at November 30, 2012, is presented below.

Common stock, par value $5, authorized 200,000 shares, 100,000 shares issued and outstanding

Paid-in capital in excess of par Retained earnings

$500,000

100,000

300,000

$900,000

On December 1, 2012, the board of directors of Gaffney Company declared a 5% stock dividend, to be distributed on December 20. The market price of the common stock was $10 on December 1 and $12 on December 20. What is the amount of the change to retained earnings as a result of the declaration and distribution of this stock dividend?

1. $0

2. $40,000

3. $50,000

4. $60,000 5.

None of the above.