Hannah Co. has 10,000 shares of $10 par common stock outstanding. A 10% stock dividend is declared when the market price is $50 per share. Which one of the following statements regarding the stock dividend is true?

Refer to the data in #6. Following the stock dividend, a cash dividend of $4 per share is declared and paid to Hannah Cos' shareholders. The debit to Retained Earnings will be: $44,000 $40,000 There is no debit to Retained Earnings