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Joe Carry-out Coffee began the year with $89,000 in retained earnings, and 61,000 shares of $0.50 par value common stock originally issued at $10 per

Joe Carry-out Coffee began the year with $89,000 in retained earnings, and 61,000 shares of $0.50 par value common stock originally issued at $10 per share. The board of directors declared $24,000 of cash dividends on June 30. On July 1, Joe Carry-out declared a 20% stock dividend. The market price of the Joe Carry-out stock was $12.50 just before the dividend. Which of the following is one effect on the day the stock dividend occurs?

Retained earnings declines by $152,500.

Common stock increases by $12,200.

Total shareholders equity increases by $152,500.

The market price of the stock increases by 20%.

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