On January 1, 2018, Dodd, Inc., declared a 10% stock dividend on its common stock when the fair value of the common stock was $30 per share. Stockholders' equity before the stock dividend was declared consisted of:

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

issued and outstanding 120,000 shares: $1,200,000

Additional paid-in capital on common stock : 150,000

Retained earnings 700,000

Total stockholders' equity $2.050 000

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

a. $180,000 decrease

b. $360,000 decrease

c. $600,000 decrease

d. $300,000 decrease