On January 1, 2021, Vaughn Manufacturing, 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 122000 shares	$1220000
Additional paid-in capital on common stock		148000
Retained earnings		724000
Total stockholders' equity		$2092000

What was the effect on Vaughns retained earnings as a result of the above transaction?

$634400 decrease

$195200 decrease

$317200 decrease

$390400 decrease