On January $1,2026,$ Pharoah, Inc. declared a $10\%$ stock dividend on its common stock when the fair value of the common stock was

$$32$ per share. Stockholders' equity before the stock dividend was declared consisted of:

Common stock, $$10$ par value, authorized $200,000$ shares;

issued and outstanding $111000$ shares

$$1110000$

Additional paid$-$in capital on common stock

$145000$

Retained earnings

What was the effect on Pharoah's retained earnings as a result of the above transaction?

$$177600$ decrease

$$577200$ decrease

$$288600$ decrease

$$355200$ decrease